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Sorry, Having IMDB Accurately List Your Age Doesn't Entitle You To A Million Dollars

Tim Cushing — Mon, 15 Apr 2013 07:57:24 PDT

Junie Hoang has lost her lawsuit against IMDb. She sued the online database for "breach of contract" after it replaced her fake birthdate (1978) with her real one (1971). The case had a few twists and turns, most of them "wrong ways" and "dead ends."

Claiming the posting of her real birthdate to be an invasion of privacy, Hoang first pursued this suit anonymously for fear of being tossed aside by Hollywood's ageist tendencies. Unfortunately for Hoang, Judge Marsha J. Peschman told her she'd have to reveal her name to proceed with the lawsuit, finding Hoang's worries of industry blacklisting not sufficient enough to justify continued anonymity.

Now, while Hoang claimed revealing her birthdate was an invasion of privacy, she sued IMDb for breach of contract. Here's how this all went down.

Hoang signed up for a subscription service with the website called IMDb Pro... She said she initially listed a false birth year - 1978, instead of 1971 - because she usually plays characters younger than she is.

But eventually, she moved from her hometown of Houston, Texas, to the more competitive entertainment market of Los Angeles, and as what would have been her fake 30th birthday approached, she decided she didn't want any age listed on her profile.

IMDb refused to remove the age listed unless she could provide evidence that it was incorrect. She asked the company to check its records to see if it had any information that would substantiate that age.

The company did so - using her account information to find her real name, and then using her real name to conduct a public records search and discover her true age. IMDb posted her real age on her profile, over her objections.

In essence, Hoang sued IMDb for doing exactly what she asked it to do -- verify her age. She claimed this investigative work violated IMDb's privacy policy. IMDb disagreed with this assessment (along with pretty much every other claim), stating the privacy policy is in place to protect actors' contact info -- not their date of birth, and that listing the date of birth was its First Amendment right.

Hoang was seeking $1 million in damages for harm done to her career by having her real age outed. The jury was not convinced by Hoang's less-than-stellar case, as IMDb noted in its post-trial filing.

“Hoang did not present any testimony, documents, or other evidence supporting her damages allegations of lost income and profits. Neither Hoang nor her agent Joe Kolkowitz—her only two witnesses on damages—offered any testimony about future damages, and neither offered competent testimony on which a reasonable jury could base an award of damages for acting jobs allegedly lost to date.”

Perhaps her career to date made it difficult to prove a tremendous upside was being destroyed by IMDb's callous recordkeeping. As was noted earlier here at Techdirt, she has made an appearance in Penn & Teller's Bullshit! This is in addition to roles in Gingerdead Man 3: Saturday Night Cleaver and Hoodrats 2: Hoodrat Warriors.

Of course, it isn't over until the last appeal has been exhausted and Hoang announced (pretty much as soon as the verdict was read) she will be appealing the decision. She still believes it's unfair that IMDb lists birth dates for actors and actresses and makes it harder for those of a certain age to land roles. She points out that it's illegal for employers to ask interviewees how old they are, but IMDb's listings save those in casting the trouble of skirting the law.

Whether or not another court will find this argument worth $1 million remains to be seen, especially considering Hoang's career arc to this point. She and her agent didn't seem to be too persuasive the first time around and unless they've got something more compelling than "Hollywood is ageist," this appeal will likely fail.

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Authors Guild's Scott Turow: The Supreme Court, Google, Ebooks, Libraries & Amazon Are All Destroying Authors

Mike Masnick — Mon, 8 Apr 2013 08:46:56 PDT

We've written more than a few times about Scott Turow, a brilliant author, but an absolute disaster as the Luddite-driven head of the Authors' Guild. During his tenure, he's done a disservice to authors around the globe by basically attacking everything new and modern -- despite any opportunities it might provide -- and talked up the importance of going back to physical books and bookstores. He's an often uninformed champion of a past that never really existed and which has no place in modern society. He once claimed that Shakespeare wouldn't have been successful under today's copyright law because of piracy, ignoring the fact that copyright law didn't even exist in the age of Shakespeare. His anti-ebook rants are just kind of wacky.

However, in his latest NY Times op-ed, he's basically thrown all of his cluelessness together in a rambling mishmash of "and another thing", combined with his desire to get those nutty technology kids off his lawn. For the few thousand members of the Authors Guild, it's time you found someone who was actually a visionary to lead, rather than a technology-hating reactionary pining for a mythical time in the past.

First up, a confused reaction to the Supreme Court's protection of first sale rights in Kirtsaeng.

LAST month, the Supreme Court decided to allow the importation and resale of foreign editions of American works, which are often cheaper than domestic editions. Until now, courts have forbidden such activity as a violation of copyright. Not only does this ruling open the gates to a surge in cheap imports, but since they will be sold in a secondary market, authors won’t get royalties.

First of all, no, this was not a "change" in US law. Courts had not forbidden this particular situation in the past, because the specifics of this hadn't really been tested in the past other than a few recent cases with somewhat different fact patterns. The point of the Supreme Court's ruling was to reinforce what most people already believed the law to be: if you buy a book, you have the right to resell it.

As for the "surge" in cheap imports, let's wait and see. It might impact markets like textbooks, which are artificially inflated, but for regular books? It seems like a huge stretch to think that it would be cost effective to ship in foreign books just for resale. And, of course, secondary markets have existed for ages, and studies have shown that they actually help authors because it makes it less risky to buy a new book, since people know they can resell it. Turow admits that secondary markets have always existed, but then jumps to what this is all "really" about in his mind: This may sound like a minor problem; authors already contend with an enormous domestic market for secondhand books. But it is the latest example of how the global electronic marketplace is rapidly depleting authors’ income streams. It seems almost every player — publishers, search engines, libraries, pirates and even some scholars — is vying for position at authors’ expense.
Yes, that's right. The Kirtsaeng decision isn't just about first sale, it's really about the evil "global electronic marketplace" sucking authors dry. Of course, Turow fails to mention that Kirtsaeng had next to nothing to do with the internet. Yes, Kirtsaeng ended up selling his books via eBay, but tons of books sell on eBay. That had no impact on the ruling at all. The issue in the ruling was about books legally purchased abroad, and Kirtsaeng did that without the internet -- he just had friends and family back in Thailand buying books for him. To blame that on "the global electronic marketplace" is just completely random and wrong. It seems like the kind of thing someone says when they just want to blame technology for everything. Turow has his anti-technology hammer, but he's got to stop seeing nails in absolutely everything.

Authors practice one of the few professions directly protected in the Constitution, which instructs Congress “to promote the progress of Science and the useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The idea is that a diverse literary culture, created by authors whose livelihoods, and thus independence, can’t be threatened, is essential to democracy.

Turow is a lawyer. As such, I would expect him not to misrepresent what the Constitution says, but he's done so here. Authors are not "directly protected in the Constitution." The Constitution does not "instruct" Congress to create copyright to promote the progress. Article 1, Section 8 of the Constitution grants Congress specific powers concerning what it can do. It does not "instruct" Congress that it must do these things. The same section of the Constitution also gives Congress the ability to "grant letters of marque" to privateers ("pirates" on the high seas) to attack enemies. No one would ever argue that the Constitution "instructs" Congress to authorize pirates on the high seas to "attack and capture enemy vessels." In fact, Congress has not officially used this power since 1815. Similarly, there is no requirement that Congress "protect" authors in this manner, no matter how much Turow may pretend this is the case.

Frankly, it's bizarre that Turow would so misrepresent the Constitution, when he must know what he's saying is untrue. It really calls into question why the NY Times allows such blatantly false statements to go out under its name.

That culture is now at risk. The value of copyrights is being quickly depreciated, a crisis that hits hardest not best-selling authors like me, who have benefited from most of the recent changes in bookselling, but new and so-called midlist writers.

Take e-books. They are much less expensive for publishers to produce: there are no printing, warehousing or transportation costs, and unlike physical books, there is no risk that the retailer will return the book for full credit.

Note the implicit assumption: only publishers produce books. Turow, apparently, ignores the fact that these modern technological wonders (which he hates so much) have enabled an entire new world of massively successful self-published authors, who take advantage of this situation to realize that they don't need publishers, and the lower costs and ease of distribution makes things much easier. As Clay Shirky has said in the past, publishing is a button, not an industry. And, no, that doesn't mean that authors should all do it by themselves, but the challenges are in marketing, not in "publishing" or distribution any more (with respect to ebooks).

Also the idea of a literary culture at risk is laughable. More books are being published today than ever before. More people are reading books today than ever before. More people are writing books than ever before. Books that would never have been published in the past are regularly published today. There is an astounding wealth of cultural diversity in the literary world. Sure, some of it means a lot more competition for the small group of authors (only about 8,000 or so) that Turow represents... oh wait, I think we've perhaps touched on the reason that Turow is all upset by this. But, of course, more competition for that small group of authors does not mean the culture of books and literature is at risk at all. Quite the opposite.

But instead of using the savings to be more generous to authors, the six major publishing houses — five of which were sued last year by the Justice Department’s Antitrust Division for fixing e-book prices — all rigidly insist on clauses limiting e-book royalties to 25 percent of net receipts. That is roughly half of a traditional hardcover royalty.

Best-selling authors have the market power to negotiate a higher implicit e-book royalty in our advances, even if our publishers won’t admit it. But writers whose works sell less robustly find their earnings declining because of the new rate, a process that will accelerate as the market pivots more toward digital.

Again, this totally ignores the new reality. Authors who don't like this admittedly crappy deal from the big publishers can go to alternatives. They can self-publish. Or they can sign up with one of a new crop of digitally savvy publishers who are much more like partners than gatekeepers. No surprise that Turow doesn't even seem to know these things exist. Hell, just last week we were talking about a successful self-published author who leveraged his massive success into an extremely favorable deal with Simon and Schuster to handle physical book distribution. And a week later Scott Turow argues that only historical top sellers like himself can negotiate better rates with the Big 6 Publishers in NY? Wake up, Scott, there's a whole new world out there that you seem to be ignoring.

Barry Eisler famously turned down a half million dollar contract with a publisher, because he realized that the economics of going direct were much better. Plenty of authors are recognizing that they have leverage today where they used to have none. It seems odd that Turow doesn't even acknowledge this reality at all, instead assuming that authors are still locked into the system where the only way they can become published is by taking a bad deal with a publisher.

And there are many e-books on which authors and publishers, big and small, earn nothing at all. Numerous pirate sites, supported by advertising or subscription fees, have grown up offshore, offering new and old e-books free.

If you're an author earning nothing at all, then you've got bigger problems than technology. It probably means you're mired in obscurity and no one knows who the hell you are. On top of that, it means you've done nothing at all to connect with your fans. Because we've seen authors who actively encourage the piracy of their books, but who also work to connect with their fans, and have seen their sales go way up, because those fans want to support the authors. Also, as most people know (why doesn't Turow seem aware of this?) ebook "piracy" is a fairly small part of the market, in part because the initial market was dominated by the Amazon Kindle, and publishers smartly jumped on board. Yes, there is ebook piracy, but it's not like the music and movie business where the official sources basically ceded the entire market to piracy for years.

The pirates would be a limited menace were it not for search engines that point users to these rogue sites with no fear of legal consequence, thanks to a provision inserted into the 1998 copyright laws. A search for “Scott Turow free e-books” brought up 10 pirate sites out of the first 10 results on Yahoo, 8 of 8 on Bing and 6 of 10 on Google, with paid ads decorating the margins of all three pages.

Okay, this is just dumb. First of all, no one is searching for "Scott Turow free e-books" so this shouldn't be much of a concern. I did a Google Trends search on "Scott Turow free e-books" vs. "Scott Turow books" and it shows no one searches for "Scott Turow free e-books", so he doesn't have much to worry about. Frankly, he should probably be a hell of a lot more concerned that not too many people seem to be searching for "Scott Turow books" either. But the larger point here is that, even if people were searching for "Scott Turow free e-books," how would that matter that much? By the very fact that they're doing that particular search, they've more or less self-identified as people not interested in paying money for Scott Turow books, so they're not the market anyway.

If I stood on a corner telling people who asked where they could buy stolen goods and collected a small fee for it, I’d be on my way to jail. And yet even while search engines sail under mottos like “Don’t be evil,” they do the same thing.

This is silly on multiple levels. First of all, by his own numbers, Google (who uses "Don't be evil") had the least number of "bad" sites in the results according to Turow. I did the same search and actually found only a couple sites that possibly were infringing. Instead, I did see links to the Authors Guild, to Amazon, to Turow's Wikipedia page... and to an old Techdirt article about Turow's cluelessness. That said, you could argue that if Google is "being evil" here it's actually by not giving its users what they're looking for -- which is clearly "free e-books." If people were actually doing this search (and we've already shown they're not) then perhaps it really just meant that Turow should be offering his own damn free ebooks, since that's what people are looking for. Why not offer an early work as a free download to get people interested in his books? Hell if he's really worried about it, offer up the first five chapters of a book. I've read a few of his books, and they can really grab you. Let people read the first few chapters for free and I'd bet lots of people would pay a reasonable price for the full book.

Instead of understanding any of this, Turow falsely attacks search engines on multiple levels. First, he suggests they're at fault because people are looking for free ebooks (even if they're not actually doing so for his own books). He assumes that because he did that search, others must. Second, when those search engines actually try to deliver what these theoretical people want (despite the fact that Turow himself has failed to do so) he complains about it. Finally, he falsely suggests that the search engines are making money doing so. They're not. Search engines make money if people click on ads. If someone sees a free ebook and clicks on an organic link, the search engine isn't making any money. I recognize that Turow hates technology, but that's no excuse for being blatantly ignorant about it when spewing misrepresentations in the NY Times.

From there, he attacks Google's book scanning project.

Google says this is a “fair use” of the works, an exception to copyright, because it shows only snippets of the books in response to each search. Of course, over the course of thousands of searches, Google is using the whole book and selling ads each time, while sharing none of the revenue with the author or publisher.

The second sentence has nothing to do with the first sentence. It is fair use because they're only showing snippets at a time, and most of those searches lead people to places where they can buy the books. I just did a search on Google Books for "Scott Turow" and the top links is to an Amazon page listing out all of Turow's books for sale. You'd think he'd appreciate such things. But, then, he'd have to not be a technologically illiterate Luddite.

All of this also ignores that Google's book scanning is really just about creating a rather useful card catalog for books, making them easier to find. Over and over again, people who have actually looked at the issue (i.e., not Scott Turow) have found that Google books increases sales of books. Considering he was just complaining about authors not getting any money, you'd think this would be a good thing.

He drones on about Google scanning books for a while, and then... attacks libraries for wanting to lend out ebooks, insisting that if they can do that, no one will ever buy a book again.

Now many public libraries want to lend e-books, not simply to patrons who come in to download, but to anybody with a reading device, a library card and an Internet connection. In this new reality, the only incentive to buy, rather than borrow, an e-book is the fact that the lent copy vanishes after a couple of weeks. As a result, many publishers currently refuse to sell e-books to public libraries.

One might also say "in this new reality," libraries are helping people access the wealth of information contained in books, just as they've always done. Who knew Scott Turow was so anti-library? It's kind of silly that maximalists and luddites keep jumping back to this trope. The idea that if you can get something for free, no one will ever pay for it. That's never been true and will never be true. All of the works that people pay for and download to their Kindles are already available for free on unauthorized sites. But tons of people pay. All of the music that people pay for and download to their iPods is already available for free on unauthorized sites. But tons of people pay. People will pay all the time for things they can get for free. Just check out the bottled water industry.

Turow then jumps back to attacking his other technological nemesis, Amazon, based on random speculation about a patent the company received:

An even more nightmarish version of the same problem emerged last month with the news that Amazon had a patent to resell e-books. Such a scheme will likely be ruled illegal. But if it is not, sales of new e-books will nose-dive, because an e-book, unlike a paper book, suffers no wear with each reading. Why would anyone ever buy a new book again?

Well, there's that trope again. Also, this ignores the ReDigi ruling, which has already said this is illegal, though that will be appealed. But, again, lots of people will still buy new ebooks, because they like to support authors. Also, it's likely that smart authors will embrace new and interesting business models in which this kind of thing isn't a problem. They can use Kickstarter to "pre-sell" the books and get support from fans. They can offer special benefits for fans who buy new books (such as membership in a fan club with other fans of that author). They can provide early previews or discounts on future or past works to those who buy first run copies of their new works. The list goes on and on -- and those are just the ones I came up with in the 30 seconds I spent thinking about it. Give me a full day to work on it, and the list would be in the dozens. But Turow, bizarrely, assumes that no one could possibly come up with any other reason.

And, from there, we go off onto a totally wacky tangent about Russia.

Last October, I visited Moscow and met with a group of authors who described the sad fate of writing as a livelihood in Russia. There is only a handful of publishers left, while e-publishing is savaged by instantaneous piracy that goes almost completely unpoliced. As a result, in the country of Tolstoy and Chekhov, few Russians, let alone Westerners, can name a contemporary Russian author whose work regularly affects the national conversation.

Note that he names Tolstoy and Chekhov -- two authors who both died more than a century ago. Could Turow easily name for us a Russian author from the 1940s who regularly affected the national conversation? How about the 1960s? 1980s? 1990s? No? Perhaps the problem isn't ebooks and piracy.

Meanwhile, as it so happens, not too long ago, we wrote a report on the content markets in various countries, including Russia. Turow might find it helpful, since he seems to be at a loss for actual data and facts in so many of his public statements on these issues. He can get a copy of The Sky is Rising 2 if he'd like. We offer it for free (the horror!). In it, he'd discover that the Russian book business is on the upswing. In the past fifteen years, the number of books published has increased by an impressive 266%, from just 33,623 in 1995 to 122,915 in 2011. That rate of growth exceeded all of the other countries we studied in Europe. It is true that the Russian market saw a decline in book revenue between 2008 and 2011 as the worldwide recession had an impact, but it has also recently seen the absolutely massive growth in the sale of ebook readers. As we've seen elsewhere, growth in ebook readers almost always acts as a leading indicator for later growth in ebook sales, because most readers connect easily to various authorized ebook stores, and the convenience factor leads to sales. One of the issues in Russia has been that many of the established players have been exceptionally slow in offering up authorized copies in the Russian market. If there are no authorized copies to buy, it shouldn't be a huge surprise to find out that people seek out alternatives.

It should be noted that when famed author Paulo Coelho decided to pirate his own book in Russia, it was because his publisher refused to offer a Russian translation. And what Coelho discovered was that sales of his book jumped from around 1,000 books to over 100,000 books because of his own decision to seed an unauthorized Russian translation. At the very least, this suggests that "piracy" isn't the problem and that, if handled well, authors can absolutely get people to buy, even when free works are available.

Scott Turow is clearly a smart individual. He's a fantastic author, whose books I've enjoyed for years. But it boggles my mind that he's so anti-technology based on ridiculous and ignorant claims, and that despite being called out on his ignorant statements for years, he chooses not to learn, but instead doubles down on those same ignorant statements by saying even more. It's doubly confusing that the NY Times sullies its own good name by allowing such obviously false statements to be published under its masthead.

Finally, the 8,000 or so authors (a mere fraction of the number of actual authors out there) who make up the Authors Guild are not served well by having someone as technologically reactionary as Turow leading them. It seems they'd be much better served by having a visionary leader who looks at ways to embrace new opportunities and who has realized that they can help to better promote, to connect with fans and to monetize their works. Having someone just yell about general progress, and try to ignorantly shoo the "kids" off his lawn over and over again, does them no favors.

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Amazon Refuses To Publish First Cornish-Language Ebook

Glyn Moody — Wed, 3 Apr 2013 15:34:00 PDT

As we've noted before, Amazon is beginning to wield considerable power over the entire publishing chain. The past teaches us that as successful companies gain near-monopoly powers, their arbitrary decisions become more problematic. Here's an unusual example of that, pointed out to us by @IndigenousTweet via @MLBrook:

Diglot Books Ltd has today been told that Kindle Direct Publishing will not publish their bilingual children's picture book Matthew and the Wellington Boots because it is written in Cornish.

The book which was released for St Piran's Day earlier this month has been successfully launched on the iTunes platform, but will not be available to Android or Kindle Fire users because "the book is in a language that is not currently supported by Kindle Direct Publishing."

Fair enough, you might think -- if Cornish uses some weird alphabet not supported by Amazon, there's not much to be done. Except that's not the case: The Cornish language which uses exactly the same alphabet as the English language has been on the rise since its recognition as a living language in 2002 under the European Charter for Regional and Minority Languages, and is now spoken fluently by several thousand people.
That is, no special characters are needed, as the Cornish Wikipedia's page on the language demonstrates, so there is no technical reason for Amazon not to publish the book. Clearly, this is just an arbitrary decision on the company's part, one that it is essentially impossible to appeal against.

As the press release from the publishers quoted above notes, Diglot Books were able to use iTunes to offer their ebook instead. Some might say this is a case of out of the frying pan into the fire, since in the past Apple too has shown itself inflexible in terms of what it will and won't accept. Had Apple refused to carry the title for whatever reason, it's arguable that the Cornish language, still struggling to re-establish itself after dying out a couple of hundred years ago, would have suffered as a result of this lack of access to the main ebook distributors.

Promoting Cornish may not be high on everyone's list of priorities, but Amazon's refusal to publish the first ebook in the language provides another worrying example of how it is failing to use its increasing global power responsibly.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

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A Merger Challenge Not Worth Rating: The DOJ's Misguided Suit Against A Paltry Software Merger

David Balto — Wed, 27 Feb 2013 13:19:00 PST

The following is a guest post from David Balto, former Federal Trade Commission Policy Director. Mr. Balto represented SunGard Data Systems in the US v. SunGard case described in this post.

Antitrust merger enforcement is a unique area of the law. It requires an assessment of whether a merger carries the potential of significantly harming competition. Courts are not very good at predicting the future and justifiably are very reluctant to prevent or unwind an acquisition without strong evidence of likely anticompetitive effects. Appropriately the antitrust enforcers rarely turn to the courts to try to stop business conduct that is typically procompetitive.

This cautionary approach is particularly necessary in software and other high tech markets. Antitrust analysis works best in traditional products, such as industrial products, that have existed for years in which the characteristics of products and the dimensions of competition are well defined. But in software the products are rapidly evolving, demand is ever changing, and the nature of competition can change overnight. Today's so called dominant firm may find itself an afterthought as the market turns to a whole different set of solutions. Not surprisingly, in the past decade the two litigated challenges to high tech mergers, Oracle's acquisition of PeopleSoft and SunGard's acquisition of Comdisco, resulted in stunning defeats for the Department of Justice's Antitrust Division.

That is why many observers were puzzled when the Antitrust Division sued to unwind the merger between Bazaarvoice, a social software and data analytics company, and PowerReviews, a small provider of online reviews that had less than $12 million in total revenues at the time of the transaction. (No one can seem to recall anytime the Division has sued to block a merger of a firm with an amount as paltry as $12 million in revenue). The merger involves the exciting software for providing ratings for products on the Internet, a product that did not exist a few years ago. Although the Division seems to highlight some documents that seem to suggest potential anticompetitive effects, the wooden analysis of the complaint reflects a simple structural view that overlooks the many dimensions of competition and the dynamic nature of the market. Rather than fully probing the likely competitive effects and dynamism of the online retail industry, the Division describes markets, consumer choices, and entry conditions that do not reflect reality. As a result the complaint is plagued by internal inconsistencies and fails to recognize the true price constraints that mitigate the potential for any harm the DOJ predicts as a result of this transaction.

The DOJ Fails to Articulate a Proper Relevant Market

Antitrust analysis may sound daunting, but it is very straightforward. The lodestar in any antitrust case is to define the relevant market – that is to determine what are the products that effectively compete with one another. In a merger challenge, if the government does not properly define the relevant market then the case is over. Defining the market can be very challenging, especially in dynamic markets such as software. Not surprisingly, the government's defeats in challenges to software mergers have typically been because they did not define the relevant market properly.

The DOJ defines the relevant market as "product ratings and review platforms," or "PRR platforms," and explains that these platforms "collect and display consumer-generated product ratings and reviews online." It is axiomatic that defining a relevant market establishes the boundary between products that do compete and those that do not, and determines the firms or products that constrain the relevant firm’s exercise of market power. As the Ninth Circuit has opined, "A relevant market is identified by considering commodities reasonably interchangeable by consumers for the same purposes. Put another way, the relevant market includes all sellers or producers who have actual or potential ability to deprive each other of significant levels of business." As the literature makes clear, if a putative relevant market is too narrow, and does not account for competitive forces that serve as a real price constraint on the parties, then the analysis risks condemning perfectly legitimate and competitive behavior by imputing market power where it does not exist.

On this count in Bazaarvoice, the DOJ does not get to first base. The DOJ's alleged PRR platform market is too narrow and falls prey to the mischaracterization of market power risk embodied in the literature. PRR platforms are one of many social-technological tools that retailers and manufacturers use to communicate with end-user customers. Bazaarvoice and PowerReviews compete against numerous firms that strive to empower the consumer's voice through social media to "collect, organize, and display consumer-generated product ratings and reviews online." Manufacturers may use popular network-driven social media tools such as Facebook, Twitter, Google+ and Yelp or more nuanced social media tools such as YouTube, Pinterest, and LinkedIn to give the consumer a voice in online product reviews. Alternatively, manufacturers and retailers can include social media tools that are similar, but not identical, to consumer reviews such as question-and-answer, and community forums.

These alternative platforms constrain Bazaarvoice, PowerReviews, and other companies that provide third-party review and aggregating services. When a retailer or manufacturer considers purchasing services from these companies, they do not look only at these two options, but also at the available outlets for consumer review generation provided by the ever-increasing array of social media platforms.

In defining markets, the courts rely on a wide variety of evidence including econometric price studies, other pricing evidence, win/loss data, and testimony of customers. None of this is present in the DOJ complaint. Instead the DOJ relies largely on the defendant's documents, but this is a thin reed indeed. Many of these documents are outdated and ignore the realities inherent in this fast-moving industry. It is debatable whether these documents reflected the true nature of competition at the time they were created. It is certain, however, that these documents no longer reflect the current state of competition. For instance, the DOJ twice references an April 2011 email in which a Bazaarvoice executive characterized the nature of the industry and opined that alternatives to Bazaarvoice are "scarce" and "low-quality." In the intensely rapid changing world of the Internet, documents from 2011 are about as relevant as a floppy disk. Instead of 1) demonstrating that this was in-fact true in 2011, and 2) reestablishing that this description remains accurate, the DOJ's complaint merely assumes that both are the case. However, this description does not align with today's online retail industry or its intersection with social media. These are industries highlighted by dynamism, and it would be incorrect to believe that the relationships between PRR platforms and other social media outlets for consumer reviews have remained stagnant.

Even If One Accepts the DOJ's Relevant Product Market, the DOJ Fails to Recognize the Dynamic Nature of Competition

As explained above, a product market of PRR platforms is not a proper relevant market for antitrust purposes. Even assuming arguendo that PRR platforms constitute a proper market, however, the DOJ's complaint fails to discuss adequately the nature of competition within these parameters.

Two fatal flaws plague the DOJ's analysis. First, the DOJ fails to offer any explanation for portraying the PRR platform market as consisting of just two meaningful competitors and numerous fringe competitors who offer no real constraint. The DOJ attempts to justify this portrayal by analyzing the nature of competition between Bazaarvoice and PowerReviews within the "Internet Retailer 500," but it is unclear why the government focuses so closely on this tiny market segment and it is even less clear whether an impact solely on that segment would violate the law. The DOJ even concedes that the PRR platform industry "can range from simple software solutions a company has developed with internal resources to sophisticated commercial platforms offering a combination of software, moderation services, and data analytics tools." However, despite this wide range of styles and services, the complaint analyzes only a small segment of the market and suggests that these large sophisticated companies have only two effective alternatives.

The Division has made this mistake in the past, and it did not end well. In Oracle the DOJ "failed to prove that there are a significant number of customers (the 'node') who regard Oracle and PeopleSoft as their first and second choices." Instead, the DOJ tried to make the unilateral effects argument with the unpersuasive facts that it had. Judge Walker admonished the DOJ, stating the "Plaintiffs' attempt to show localized competition based upon customer and expert testimony was flawed and unreliable. Moreover, plaintiffs' evidence was devoid of any thorough econometric analysis such as diversion ratios showing recapture effects." (A "diversion ratio" shows how much of one competitor's business will shift to another competitor if there is a price increase.)

The complaint against Bazaarvoice is equally flawed. The diversion ratios will simply not tell a story wherein a sizeable portion of all participants in the DOJ's (already flawed) market perceive only Bazaarvoice and PowerReviews as next-best options. If the evidence of diversion ratios were available, the DOJ would have presented it already. In fact, this is a consummated merger – the real-life data should show this effect if it is true. Instead, the data likely tells a story of widespread, dissimilar, and largely unpredictable cross-elasticity of demand. It is probably the case that no "node" in the PRR platform industry exists because the dynamic nature and subjective needs of clients dictate that there is no significant captive set of consumers choosing only between Bazaarvoice and PowerReviews.

Second, the DOJ completely ignores the concept of self-help in the social media consumer reviews industry. At its core, the products supplied by Bazaarvoice and PowerReviews are based on simple technology. These companies create software that appears on a retailer's website and enables consumers to provide first-hand product reviews. The companies also provide differing analytic and syndication services, both of which are a function of nothing more than intelligent use of data. There is nothing stopping retailers and/or manufacturers from creating the same service and extracting value from the data. Unsurprisingly, companies often perform some or all of these tasks themselves. Amazon stands out as a leader in providing consumer review platforms and uses the data to drive marketing and sale decisions. Zappos, the online shoe and apparel company from Henderson, Nevada provides its own consumer review platform on its website, and uses this information not only to improve sales and marketing, but to provide an added level of consumer care.

Like the question of the consumer "node," the DOJ has also failed to account for internal solutions as a price constraint. Once again the DOJ is forgetting an important lesson from a past defeat. In SunGard, the DOJ tried to block the merger of two firms that provided computer disaster recovery services, which sounded like tremendously sophisticated and complex services. But the court found that self-help ("internal hotsite solutions") was a perfectly adequate option for many customers. The DOJ had portrayed the notion of internal hot sites as expensive and difficult to create, and suggested that not enough customers would turn to internal solutions to prevent the merging parties from raising prices. Judge Huvelle disagreed, and pointed out that, not only did internal solutions exist in some capacity, but that the incentive to create internal solutions would increase alongside any increase in price. Furthermore, the evidence demonstrated that customers had varying needs, and "any generalizations regarding customer behavior cannot be arrived at with any certainty, since it depends on a host of factors, including the type of equipment a customer must duplicate, the particular circumstances and needs of the customer, and in some cases, the size of the customer's operations."

The same can be said for customers of social media consumer review -- any attempt to predict the future needs and behaviors of customers is nothing more than generalization and speculation based upon incomplete data, an uncertain technological future, and dynamic and varied customer needs.

The DOJ Fails to Account Adequately for Entry and Expansion, Both of Which are Likely

The DOJ asserts that anticompetitive harm resulting from this transaction will not be corrected by additional competitors entering the market or existing participants expanding. The rationale for this assertion lies primarily in the DOJ's contention that Bazaarvoice's syndication network creates an insurmountable entry barrier. This statement ignores the fact that PowerReviews entered the market and competed effectively without offering a syndication product on par with Bazaarvoice's. Furthermore, the DOJ makes no attempt to quantify the number of Bazaarvoice customers that take advantage of the syndication offering. In fact, many manufacturers and retailers choose not to utilize this service, instead preferring to outsource to another vendor or perform the analytics in-house.

Notwithstanding these factual oversights, the assertion that Bazaarvoice's syndication network is a barrier to entry fails. The aggregation of data through the creation of consumer reviews is a profitable endeavor, but it is also an easily repeated endeavor. Bazaarvoice's reviews and sophisticated analysis may make it a better competitor but it does nothing to cement Bazaarvoice as an enduring competitor in the face of an improved service. Allegations of network effects as barriers to entry are made far too lazily, and the DOJ would have the trier of fact believe that a piece of data can only be captured once, or is a zero-sum game. This is just not the case. There is competition for data just as there is competition for any other product. Finally, as the value of data continues to increase, retailers and manufacturers will have less incentive to continue outsourcing this portion of the business to Bazaarvoice.

Unsurprisingly, entry is already occurring in this alleged market. Reevoo and Yotpo are new entrants looking to disrupt competition, while Amazon and Google are established market participants looking to grow their profits at the expense of companies like Bazaarvoice. The DOJ's entire theory of harm is premised on a presumption of stagnancy that runs contrary to the nature of the high-tech and electronic commerce industries.

Conclusion

Antitrust enforcement in high tech markets poses special challenges -- to recognize the dynamic fast paced nature of competition, the fluidity of product markets, and the opportunities for new forms of rivalry. Unfortunately, the complaint in the Bazaarvoice case takes a static approach hinged to a few outdated documents. Without more it is unlikely a court will take the draconian step of unwinding this merger.

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Should Google, Amazon And Others Be Able To Lock Up New Generic Top Level Domains For Their Own Use?

Mike Masnick — Fri, 22 Feb 2013 18:33:00 PST

For many years, we've noted that the entire setup of ICANN rolling out new top level domains (TLDs) was a complete joke, often driven by ICANN members who were in positions to be the registrars and registers for those new domains. Thus, all they seemed to do was create money out of thin air for those companies, since there was no actual demand for the TLDs, but companies felt obligated to buy them up anyway, to "keep them out of the hands" of critics, scammers or others. And, certainly a big fear when ICANN decided to offer up its big "generic TLD" setup, whereby anyone could make a play for any new TLD, was that the whole thing was a boondoggle for domain registers and registrars with which to set up a whole bunch of new tollbooths.

However, a funny thing happened along the way. While there certainly were a bunch of those kinds of TLDs applied for (many with competing claims fighting for the right to cash in), what became more interesting was the fact that the list of applications was absolutely dominated by Google and Amazon seeking to gain control over a very long list of TLDs. In fact, we noted that in many cases, Google and Amazon were lined up head to head competing over who would gain control over those TLDs. For example, they're competing with each other (and with some others) for the rights to .book, .shop, .store, .free, .game, .search, .play, .movie, .show, .mail, .map, .spot, .talk, .wow, .you and .cloud. And both of those companies are going for a bunch of others where they're not competing with each other. Google, for example, wants (among other things) .car, .dad, .mom, .dog, .family, .fyi, .plus, .tour, .prod, .here, .prof, .phd, meme., .lol, .day, .love and more.

As you look down the list, you begin to realize that while the initial fear of registers and registrars shaking down everyone to buy new domain names to "protect" their trademarks was a legitimate concern, there was a second serious concern as well: that a bunch of these new gTLDs were not being applied for to set up a registry where anyone could obtain those kinds of domains, but rather to lock them up for one company's use. And while Amazon and Google are the most prominent players here, lots of other companies jumped in as well. Hasbro wants .transformers. Johnson and Johnson wants .baby (so do a bunch of others). Ralph Lauren wants .polo. Travelers Insurance wants the completely ridiculous .redumbrella, while Nationwide Insurance wants .onyourside. Monster Cable (of course) wants .monster.

While some of those more specific ones wouldn't have any demand for anyone else to register anyway, there is a growing concern that companies might lock up certain TLDs, rather than make them available for registering. I'm sure lots of car companies would like theirname.car. But would that be possible?

Apparently, ICANN -- whose boss has already admitted that they're in way over their heads on these new gTLDs -- is now considering whether or not such a use of a gTLD should even be allowed.

But companies such as Amazon, Google, Goodyear, L'Oreal and others also applied for a wide array of words and indicated that they would like to operate the registry as "closed" -- meaning they may not allow other firms to buy what are known as second-level domains.

Clearly, companies want to own and control generic words as domains so that they can offer their services. But with that comes the possibility of blocking competitors who want to attach their brand to a term. For example, Ford might want to buy ford.truck but be blocked from doing so by the owner of .truck.

The article quotes someone from a hosting firm who notes that "It is inherently in the public interest to allow access to ... new [generic top-level domains] to the whole of the Internet Community, e.g., .BLOG, .MUSIC, .CLOUD."

Of course, there is the flipside to this argument as well -- such TLDs that are simply locked up for a single company or service are also not on the market, meaning that they're not another in the long list of domains companies feel they "need to buy" purely for defensive reasons. Either way, at least one (still unnamed) applicant who is competing with a bunch of these companies for a few of the new gTLDs is hiring people to lobby Congress and the EU Parliament not to allow firms to lock up any new gTLD.

In the end, I think our original conclusion still stands: the whole gTLD process appears to be a continuing boondoggle for certain companies, whether it's to lock up certain TLDs or to sell off domains to people and companies who don't really want them, but feel compelled to pay up anyway.

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Amazon, Publishers Sued For Antitrust Violations Over DRM By Angry Indie Bookstores

Mike Masnick — Fri, 22 Feb 2013 05:46:02 PST

Dennis S. was the first of a bunch of folks to send in the news of a class action lawsuit recently filed by a bunch of independent booksellers against Amazon and the "Big Six" publishing firms arguing that Amazon's ebook DRM (and the agreements from the big publishers to use it) effectively violates antitrust law. Just about a year ago, we noted that the publisher's annoyance that Amazon was such a dominant player in the market was really their own damn fault for insisting on DRM, which really locked people into Amazon's platform and made it very hard for anyone to check out and move elsewhere. It was particularly stupid since they already had seen how the same thing helped Apple dominate in the music space.

This new lawsuit, however, could certainly shake things up quite a bit.

The logic of the bookstores' argument is this. When it launched the Kindle in 2007, Amazon convinced publishers to sell ebooks with DRM on its platform. The Kindle then became the dominant e-reader. You can't read ebooks with Amazon DRM on any e-reader but a Kindle, and you can't read any ebooks with DRM on a Kindle that doesn't come from Amazon. The plaintiffs argue these agreements and practices violate sections 1 and 2 of the Sherman Antitrust Act: anticompetitive restraint of trade (together with the publishers) and monopoly power, respectively.

But what about Nook, Apple, Google, Sony, Kobo? The booksellers claim that Amazon controls at least 60 percent of the ebook market, with Barnes & Noble at 27 percent and Apple's iBookstore at less than 10 percent. But note that none of Amazon's top competitors sell ebooks without DRM. It's suggested here that part of the publishers' nonpublic agreements with Amazon stipulate that the publishers won't sell any non-DRM copies of the same books sold for Kindle.

Where it gets potentially interesting is that one of the remedies the book stores are seeking is:

... an injunction prohibiting AMAZON and the BIG SIX from publishing and selling e-books with device and app specific DRMs and further requiring the BIG SIX to allow independent brick-and-mortar bookstores to directly sell open-source DRM e-books published by the BIG SIX

and

... an injunction prohibiting AMAZON from selling DRM specific, or non-open-source, dedicated e-readers, alternative e-reader devices, and apps.

Frankly, it would certainly be an interesting result if Amazon was barred from using DRM, but this lawsuit has almost no chance of succeeding. There are a few significant problems (and the bookstores don't seem to know what "open source" means despite using it a few times). Also, this impression that Amazon forced the publishers into DRM is, as far as I've heard, the opposite of reality. The publishers demanded DRM because they were freaked out over "piracy" of ebooks. There are a few other oddities in the lawsuit that suggest that the bookstores are (perhaps justifiably) angry, but it's not clear that they actually have a lawsuit.

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Canadian Kindle Owners Forced To Leave American Kindle Content & Features Behind

Tim Cushing — Thu, 24 Jan 2013 08:32:00 PST

Something strange and potentially awful is happening to Amazon's users in various locations outside the US. Nate Hoffelder at The Digital Reader reports that Amazon's Canadian Kindle customers are being locked out of purchasing ebooks through Amazon's .com domain.

I have received multiple reports (here, here,here) today that Amazon is now refusing to allow their Canadian customers to buy Kindle ebooks from Amazon.com.

Over the past couple days several of those readers have reported that many Kindle titles are showing up on Amazon.com as not being available to Canadian customers even though the same titles will show up on Amazon.ca as being available.

So far as I can tell, the only ebooks still available to Canadian Kindle owners are titles distributed via KDP, seriously limiting their ability to make use of their Kindles.

What seems to be happening is a push by Amazon to move customers from other countries over to their local domains, something that has been reported in Brazil, Japan and France. Other news has filtered in that this is not necessarily Amazon's doing, but is a result of publishers "moving" product to non-US regions where pricing is still advantageous (i.e., not subject to the terms of the settlements reached with the Justice Department in the ebook price-fixing investigation).

No matter who is at fault, it's the users that are getting the shaft. Amazon has only been selling Kindle ebooks to Canadians since late in 2009, but many Canadians have been purchasing ebooks through Amazon's .com domain since 2007. (Its .ca Kindle store has only been around since December of 2012.) Forcing Canadian users to set up a new .ca account means that much of what their .com accounts contain won't transfer over.

First, while Amazon claims that any purchased ebooks will be available* after a Canadian Kindle owner transfers their account that’s not completely true. The ebooks might be transferred, but I’m told that a customer’s purchase history is not transferred and the wish lists are also abandoned. That’s going to make it a lot harder for some readers to keep track of what they own and what they want to buy.

Oh, and that claim about the Kindle content transferring isn’t exactly true. Amazon.ca doesn’t yet support subscriptions, nor does it offer Kindle Serials. That means this Kindle content will be lost in the transfer process along with any back issues that had been saved. What’s more, Amazon.ca doesn’t offer music and video so transferring an account will prevent customers from accessing media they’ve already purchased.

If it's publishers making this push solely to maximize pricing advantages in non-US countries, the prices being quoted by some .ca users don't seem to bear this out. (Others have reported higher prices as well, but it doesn't seem to be anything approaching "regulation-free" price hikes across the board.) However, one site did get a response from a publisher, which indicates the current issues are possibly at least partially their fault.

After speaking to Amazon Kindle support they informed us that this change was not their doing. They said a change like this would have been made by the publisher only. One of the major publishers affected responded back to me saying, “It certainly wasn’t our intentional doing; although it may be a side-effect of our pricing model. I’ll investigate and see what I can do.”

For Canadian users (and customers in Brazil, Japan, France, etc.), it doesn't really matter which party is forcing the migration. The end result is a very possible loss of purchased content and a definite loss of purchase histories, preferences and a number of other small, but essential, perks that are part of a long-term Amazon account. This is going to hit the most loyal customers the hardest -- the last thing Amazon should want to do.

While there are many ways to route around this new issue, the fact remains that migrating a customer's account should keep it intact, especially when there's no perceived benefit for the end user. If this is publishers reshuffling their offerings to take advantage of out-of-US pricing, it's in Amazon's best interest to point this out. If this is Amazon's doing, it needed to have the kinks worked out before pushing it on its customers.

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Concerns Raised About Aaron Swartz's Prosecution And The Wikileaks Connection

Mike Masnick — Wed, 23 Jan 2013 23:08:00 PST

Let's state upfront that a lot of what's in this post is conjecture based on a few pieces of information out there. I'm not convinced that it presents enough evidence of an actual connection. However, a bunch of folks have been talking about this (and submitting it here), so we wanted to raise the issue to see what people thought, and if there was any other information that could confirm or deny some of the conjectures in the piece. As far as we can tell, some of the timing is a bit odd, but it could very well be a coincidence. We'd love to have the full story if there was one, but federal prosecutors -- especially those under media scrutiny -- aren't known for suddenly opening up about these sorts of things. Given that, we thought we'd post some of the details of the discussion for the sake of continuing the discussion and seeing if anyone had anything more conclusive, either showing a connection between Aaron Swartz's prosecution and Wikileaks... or debunking it.

We've already discussed how Wikileaks bizarrely outed Aaron Swartz as a possible source, and that's leading to other speculation as well, including a question as to whether or not the grand jury investigation into Swartz was really more about the fishing expedition against Wikileaks, rather than the whole MIT/JSTOR effort. The Emptywheel blog (linked above) notes that Swartz's defense indicated it was aware of a much deeper investigation concerning Swartz that went beyond MIT and JSTOR to Twitter, Google, Amazon, the Internet Archive and possibly more -- and asked the government to turn over such materials:

These paragraphs request information relating to grand jury subpoenas. Paragraph 1 requested that the government provide “[a]ny and all grand jury subpoenas – and any and all information resulting from their service – seeking information from third parties including but not limited to Twitter. MIT, JSTOR, Internet Archive that would constitute a communication from or to Aaron Swartz or any computer associated with him.” Paragraph 4 requested “[a]ny and all SCA applications, orders or subpoenas to MIT, JSTOR, Twitter, Google, Amazon, Internet Archive or any other entity seeking information regarding Aaron Swartz, any account associated with Swartz, or any information regarding communications to and from Swartz and any and all information resulting from their service.” Paragraph 20 requested “[a]ny and all paper, documents, materials, information and data of any kind received by the Government as a result of the service of any grand jury subpoena on any person or entity relating to this investigation.”

Swartz requests this information because some grand jury subpoenas used in this case contained directives to the recipients which Swartz contends were in conflict with Rule 6(e)(2)(A), see United States v. Kramer, 864 F.2d 99, 101 (11th Cir. 1988), and others sought certification of the produced documents so that they could be offered into evidence under Fed. R. Evid. 803(6), 901. Swartz requires the requested materials to determine whether there is a further basis for moving to exclude evidence under the Fourth Amendment (even though the SCA has no independent suppression remedy).

[snip]

Moreover, defendant believes that the items would not have been subpoenaed by the experienced and respected senior prosecutor, nor would evidentiary certifications have been requested, were the subpoenaed items not material to either the prosecution or the defense. Defendant’s viewing of any undisclosed subpoenaed materials would not be burdensome, and disclosure of the subpoenas would not intrude upon the government’s work product privilege, as the subpoenas were served on third parties, thus waiving any confidentiality or privilege protections.

Given all of that, it's leading some to wonder if this was more about the big fishing expedition a grand jury has supposedly been working on for quite some time, trying to sniff out anything that can be used against Wikileaks. There is no confirmed connection to the Wikileaks investigation, but Emptywheel notes some oddities in the timing -- such as the grand jury investigation into Aaron seeming to ramp up just as it appeared that the big Wikileaks grand jury was coming up empty. In fact, as Emptywheel showed in a different post, it looked like the investigation into Swartz was going absolutely nowhere... until the grand jury suddenly showed renewed interest long after the arrest. The post notes that the Secret Service didn't even bother searching the laptop onto which Swartz had downloaded the JSTOR material for weeks after getting involved in his case.

But what happened in between the arrest and the sudden decision to really look into Swartz? The DOJ drew a big, fat blank against Wikileaks. The timeline:

Swartz was arrested on January 6th, 2011.
On February 9th it was reported that the Justice Department had drawn a blank on anything it could use to go after Wikileaks.
That same day, February 9th, the Secret Service suddenly got around to issuing warrants to search Swartz's hardware

Oh, and one other key date. Just a couple weeks before all of this, on December 27th, 2010, Swartz had filed a FOIA seeking information concerning the treatment of Bradley Manning. As is noted in the posts linked here, it's not at all normal for the Secret Service to wait so long to get a subpoena.

I will say that I'm far from convinced there was a full connection here. There is way too much speculation and conjecture and it is quite possible (even probable) that the timing is all a coincidence. But the timing is at least worth noting, since it seems that more and more information keeps coming out about this.

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Amazon Patent Looks To Make Receiving Lousy Gifts A Thing Of The Past

Tim Cushing — Fri, 11 Jan 2013 00:01:20 PST

An interesting patent has surfaced over at Quartz, detailing a method for exchanging unwanted gifts. Amazon filed this patent application in 2006 and had it granted in 2010, but so far, has yet to make use of it. (This is not to be confused with Amazon's more controversial, broadly written "method of buying gifts online" patent which was granted back in 2009.) The twist in this patent is the exchange method, which would take place prior to receiving the unwanted gift.

A number of "rules" can be set, heading off unwanted gifts before they even hit the order fulfillment queue. In the case of the hypothetical "Aunt Mildred," the user can choose to make the best of her good intentions that disguise themselves as bad gifts and eliminate her almost entirely from the gift selection process while also leaving her completely unaware that she's been cut out in favor of a checkboxed "middleman."

In addition, users can select whether to be notified and carry out the exchange manually or allow the algorithm to do all the heavy lifting. Interestingly, the patented system will also allow purchasers to place limits on exchanges, which should lead to some very interesting post-Christmas conversations, once all the behind-the-scenes gift trading has finished.

Of course, the whole setup process is wasted should gift givers decide to purchase from other services, but adding the ability to painlessly 'hot swap' yet another sweater for something you'd rather have, without having to go through the rarely painless return/exchange process could have many Amazon customers recommending the service to familial holdouts.

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Now That Amazon Is Offering Auto-Rip Of CDs You Bought, Will It Do The Same For Books?

Mike Masnick — Thu, 10 Jan 2013 14:31:27 PST

Times change. Amazon is making some news by launching an auto-rip service that puts MP3 copies of songs into your Amazon cloud storage when you buy CDs. Some have been comparing this to the old MP3.com "Beam It!" service that got MP3.com sued out of existence a while back, but this is quite different on one key dimension: Amazon has licensing deals with the major labels which specifically allow this (which also means it doesn't work on all CDs).

Still, this move does raise some interesting question. For example: why not do this for books too? Why not have it so that when you buy a physical book, a digital copy automatically shows up on your Kindle? Of course, the real answer isn't difficult to glean: because the publishers have no interest at all in doing this (yet). I expect they'll do it eventually, but the publishers are still going through the same denial phase that many in the recording business went through earlier, and so it's probably still going to be at least a year before some publisher comes around to such a deal (and then it will be announced as "big news" when it happens).

Another interesting question is whether or not the "AutoRip" service leads to more resells of CDs soon after people buy them. As Sherwin Siy notes, it may not actually be different than buying a CD and ripping it yourself, but the automated nature of it may make it easier to simply pass on the CD. Of course, does that mean you're legally supposed to delete the MP3s too? I'm sure the industry would argue that's the case, but it might not be that clear cut.

In the end, this really is the kind of thing that the recording industry should have embraced a decade ago, so welcome to the party (a bit late).

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Amazon Pulls Down Memoir Because Cover Mentions 'Star Wars'

Mike Masnick — Wed, 26 Dec 2012 13:06:42 PST

Last week we had a story of Amazon pulling a book because of a dispute over the term "space marine," which Games Workshop insisted they have full control over due to their trademark (a massive exaggeration of what protections the trademark provides). The latest may be even worse. As a number of folks are reporting, Amazon has pulled a self-published memoir by Gib Van Ert entitled A Long Time Ago: Growing Up With and Out of Star Wars. The book has received some great reviews from places like Wired, but apparently someone at Amazon thought the title is trademark infringement. The email from Amazon seems particularly silly:

Thank you for the information you provided regarding the following book(s):

A Long Time Ago: Growing Up With And Out Of Star Wars (2353856)

Your book(s) contains references to the trademarked term, “Star Wars (Trademarked Term)”. We have reviewed the information you provided and have determined that we will not be making the book(s) available for sale in the Kindle store at this time. While we cannot advise you on trademark laws, we encourage you to conduct your own research by possibly going to your local library or using other online resources that may be available to you.

This seems silly. The use is clearly descriptive, and the memoir discusses the impact of the movie on the guy's life. No "moron in a hurry" is going to assume that it is endorsed by Lucasfilm or anything like that. The likelihood of confusion here is nil. But in our risk averse age, where too many people incorrectly think that trademark gives you 100% control over a phrase, we see more and more unfortunate stories like this. Hopefully, Amazon quickly reconsiders... and the publicity from this silly bout of blocking leads to more sales.

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Author's Book Removed From Amazon By Bogus Trademark Claim

Timothy Geigner — Fri, 21 Dec 2012 14:03:19 PST

If you recall the company named Games Workshop from Techdirt stories, you likely already have a bad taste in your mouth from my mentioning them. The game publisher responsible for the Warhammer games twice went after fan sites that were simply building a better experience for fans of the game. We wondered at the time how a company could be so boneheaded as to target their own fans and level trademark suits at them instead of getting creative with a way to allow those fans to continue to be fans. Well, I have an answer for how they could do that, and it's going to surprise you.

No, Games Workshop's CEO is not Satan...but you're close!
My theory is that the people working at Games Workshop, or at the very least their legal team, are in fact from a completely different universe than we are! How did I come up with this theory, you ask? Well, it all revolves around the company having Amazon take down author M.C.A. Hogarth's fictional novel over their supposed trademark on the term "space marine".

Today I got an email from Amazon telling me they have stopped selling Spots the Space Marine because Games Workshop has accused me of infringement on their trademark of the word ‘space marine’.

If you go to the Trademarks Database and look up the word “space marine” you’ll find the Games Workshop owns a trademark on the term “space marine,” but it only covers the follow goods and services: IC 028. US 022. G & S: board games, parlor games, war games, hobby games, toy models and miniatures of buildings, scenery, figures, automobiles, vehicles, planes, trains and card games and paint, sold therewith.

Hogarth then goes on to say that she (shockingly!) didn't come up with the term for Space Marine after playing a Warhammer board game, but instead from what appears to be its original use back in the 1930's. At the time of this writing, Hogarth's blog post states that she's discussing the situation with the people involved, so hopefully that means not only is Amazon reversing course and putting the book back up on Amazon, but also be soliciting an apology from the company.

In any case, Games Workshop being unable to understand their own trademark is only mildly surprising, but their interest in trademarking what, to me at least, seems like such a common phrase these days got me wondering just how common the term "space marine" is. So I went to Wikipedia to see what they had to say, and that is where I discovered the shocking truth: "space marine" is an archetype of science fiction. Don't know what an archetype is?

"An archetype is a universally understood symbol, term, statement, or pattern of behavior, a prototype upon which others are copied, patterned, or emulated."

This suggests two things to me. First, if "space marine" is an archetype, then by definition it is designed to be a symbol (amongst other things) for all to copy and emulate. That would seem to be the antithesis of this particular trademark suit. Secondly, if it is to be universally understood and Games Workshop didn't recognize this to the point that they decided to trademark the term as distinct, well, then they obviously are not of this universe at all. It seems clear that they're inter-dimensional lawyer-merchants that may, or may not, have plans to colonize Earth and destroy the human race.

Well, that or they're just kind of jackasses.

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Buy Your Kindle At Waterstones? You're Now Locked Into One Screensaver... The Waterstones Logo

Tim Cushing — Mon, 17 Dec 2012 05:25:01 PST

There's no better way to treat your paying customers than by taking away some functionality. Most people would consider the previous statement to be completely full of shit, but when you look at it from the perspective of a proud bookstore chain that seemingly adores its own tasteful logo, it all begins to... Nope. It's not working. The thought process involved in the following debacle seems to have short circuited somewhere between the marketing team and the IT squad, resulting in this bit of branding stupidity.

Remember how Waterstones was going to sell the Kindle and take a sales commission on the hardware and any ebooks bought from that device? Apparently they decided that the subtle but positive relationship of simply making money off the Kindle wasn't good enough; now they've turned the Kindles they sell into billboards.

The Kindles sold by Waterstones got a firmware update in early November. This update wasn't rolled out to all the Kindles, and for good reason. According to a couple different users (this story has also been confirmed by Waterstones) the only change in the update was a new screensaver.

I have not yet seen it myself, but the Kindle owners are reporting that all the screensavers have been replaced by a Waterstones logo. Furthermore, there's no way to disable or replace that screensaver, so every time these Kindle owners pick up their device they will be reminded where they purchased it.

Advertising on the Kindle is nothing new. The ad-supported version is available at a discount if the buyer's willing to put up with being advertised at in exchange for a price break. But, as The Digital Reader points out, Waterstones-branded Kindles aren't discounted.

Instead, as thanks for purchasing a portable Amazon ecosystem from a brick-and-mortar, Waterstones' customers are now locked into a single screensaver that will constantly remind them who they need to contact for a full refund... which, unbelievably, Waterstones is actually offering.

Thank you for your email regarding your Kindle Paperwhite from Waterstones.

I am sorry you are disappointed by the addition of a Waterstones screensaver after the recent software update to Kindle. It is our view that this screensaver does not constitute advertising and differs substantially to the advertising-supported Kindles available to the US market. The Waterstones screensaver is a non-dynamic, static image that will change infrequently and not advertise any specific product, offer or website.

It is not possible to remove the Waterstones screensaver to replace it with the former Amazon screensaver. We apologise that this change was made without consultation, and hope it does not detract from or alter your reading experience. However, if you feel it does, please let us know and we will arrange for the return of the device and a full refund.

I am sorry for any inconvenience this has caused.

Yours sincerely,

**********
Customer Service Team
Waterstones.com

This should do some serious damage to what was already a rather sketchy hookup. Back in September, Waterstones' CEO James Daunt made the following ostensibly cheerful statement announcing its partnership with Amazon.

"There are substantial difficulties for us around working with our major competitor," Daunt said at the Independent Publishers Guild Digital Quarterly Meeting on Tuesday, according to The Bookseller. "But we think we have an agreement which protects some of the most significant bear traps that sit there, and there are some major upsides for us."

Notably, Daunt didn't say that the agreement protects Waterstones from "significant bear traps." Instead, his Freudian slippage states that the traps themselves will be unharmed, even if, as it appears, Waterstones has to trigger the traps on its own.

The deal was never advantageous, what with Waterstones making the most money when purchasers bought ebooks using its in-store wifi network. It's hard to believe this strategy of getting customers into the physical store in hopes that they'd spend part of the time shopping on their Kindles has paid off. Perhaps the always-on "W" is meant to remind customers where they purchased their Kindles and why not go have a look around the bookstore a bit then.

On the plus side, Waterstones customers were ~~threatened with~~ ~~warned about~~ promised some additional bonuses for their branded Kindles during this rollout announcement:

At yesterday's IPG event, Daunt revealed a few more details about Waterstones' Amazon partnership. "Waterstones-specific Kindle screensavers, bestseller lists and a Read For Free offer are among the plans," The Bookseller reports.

That's a pretty frickin' specific screensaver, Daunt. Shame it changes so "infrequently" as to be completely undetectable.

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BitTorrent Book Promotion Drives 40% Of Downloaders To Book's Amazon Page

Mike Masnick — Mon, 3 Dec 2012 16:02:56 PST

Popular author Tim Ferriss got some attention recently when his latest book, The 4-Hour Chef, was published by Amazon, with a big push to try to make it a best seller (the first Amazon published book to get such a push, apparently). This scared off Barnes & Noble who refused to sell the book, because, apparently, it's run by childish and petulant execs. Ferriss, who is known for his rather extreme ability to market the hell out of anything, has actually been using this to his own advantage, continually calling out the fact that Barnes & Noble is refusing to carry the book, and using non-standard promotion techniques, including having the book sold via Panera restaurants and... doing a big promotion deal with BitTorrent. To be honest, I found some of the language used to promote that deal a bit misleading, as it appeared some people thought he was distributing the book itself via BitTorrent. Instead, he teamed up with the company to distribute "an exclusive bundle" of extra, related, content. That's still cool, but having watched some of the hype behind it, you could see how some might see it as bait and switch.

However, it appears that my concerns may have been overblown. Late last week, Ferris revealed that not only did the book land on various best seller lists (despite the lack of Barnes & Noble sales), but an astounding number of people who downloaded that extra content bundle on BitTorrent also clicked a "support the artist" button:

For instance, BitTorrent conversion is NUTS. Of 210,000 downloads (of this bundle) earlier this week, more than 85,000 clicked through “Support the Author” to the book’s Amazon page. We all had to triple and quadruple check that to believe it.

Now, of course, not everyone who clicks will buy -- and he admits that as well. But, that's still an extra 85,000 people going to the Amazon page. Some of them are likely to buy.

Even at a 1% conversion after clicking an effective “buy now” link, that translates to 850 books… and BitTorrent is only accelerating. Wow.

But BitTorrent is only for pirates and only hurts authors and artists, right?

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Amazon Freaks Out About Sock Puppet Reviews And Deletes A Bunch Of Real Reviews

Zachary Knight — Fri, 2 Nov 2012 10:44:38 PDT

For a while now, there has been a bit of a kerfuffle at Amazon over so called "sock puppet reviews" or reviews purchased by an author to help pad their books' rankings. We hadn't been covering any of it because, frankly, it was a non-story. There never was a threat to the publishing industry and it was always questionable how widespread the problem really was. Additionally, the idea that a writer would have to pay to get reviews was just a sign that those writers held no real confidence in their work.

Unfortunately, Amazon took these complaints a little too seriously. It would seem that those complaining were loud enough that Amazon heard them and did a couple of things to tackle the non-issue. First it revised its rules for review writing. to make such purchased reviews against the rules. Then it removed a bunch of reviews seemingly at random. Joe Konrath shares his experience upon reading about this:

I've been buried in a book deadline for all of October, and haven't been paying much attention to anything else. When I finally took some time to catch up reading email, I noticed I had many authors (more than twenty) contacting me because their Amazon reviews were disappearing. Some were the ones they wrote. Some were for their books. One author told me that reviews her fans had written--fans that were completely unknown to her--had been deleted.

I took a look at the reviews I'd written, and saw more than fifty of them had been removed, namely reviews I did of my peers. I don't read reviews people give me, but I do keep track of numbers and averages, and I've also lost a fair amount of reviews.

Why did Amazon go nuts deleting reviews? Well, Konrath assumes, based on his responses from Amazon, that this was the result of a new automated sock puppet detection program. Apparently, it works in much the same way as Google's ContentID: flag anything and everything and see what sticks. Actually, no. This is way worse than ContentID. At least ContentID has some kind of -- admittedly weak -- notification, human review and appeals process. That is entirely absent from Amazon's deletion program, as Konrath explains in his letter to Amazon.

My reviews followed all of Amazon's guidelines, and had received hundreds of helpful votes. They informed customers, and they helped sell books. They represented a significant time investment on my part, and they were honest and accurate and fully disclosed my relationships with the author I reviewed if I happened to know them. And these reviews were deleted without warning or explanation.

Next, in his letter, he explains just why Amazon's actions were the wrong thing to do. Primarily because this action harmed more authors than sock puppet reviews ever did.

Obviously Amazon can do whatever it wants to on its site. It isn't up to me to dictate policy. It's your company, your rules, and I fully respect that. But I believe Jeff Bezos is very much about treating customers fairly, and I've heard it said many times that Amazon considers its authors to be valuable customers. So you should know that I'm just one of dozens of authors who are saddened by this, and those are just the ones who have emailed me.

The community you're trying hard to nurture is upset by your actions. They feel those actions are unwarranted and harmful.

Please express our disappointment in Amazon to anyone who needs hear it, and let them know I'll be blogging about it. People are seriously disappointed in how Amazon handled this. It was a knee-jerk, inappropriate reaction to a ridiculous case of unjustified moral panic, and a Big Fail.

Admittedly, this act by Amazon was in response to a number of authors who complained about the problem. However, as I wrote above, it was a problem of egos, not actual harm to any specific authors or group of authors -- or as Konrath put it, an unjustified moral panic. Authors freaked out over news stories of people being paid to write reviews and it ballooned from there. And just like every other moral panic before it, this one did tons of unnecessary collateral damage.

So not only do a bunch of legitimate reviews just up and disappear, there is also further damage to Amazon and the authors it works with. Readers will be less likely to write thoughtful and meaningful reviews in the future. If your review that you spent an hour writing could just up and disappear, why bother? Is this really what Amazon and these authors want -- people less willing to review books they read? That would seem to be a far worse situation than an unconfirmed number of sock puppet reviews.

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Amazon Wipes Customer's Account, Locks All Ebooks, Says 'Find A New Retailer' When She Asks Why

Glyn Moody — Mon, 22 Oct 2012 09:21:55 PDT

Techdirt has been warning people for several years that they don't really own the ebooks they have on their Amazon Kindles. The most famous demonstration of this was the sudden disappearance of ebook versions of George Orwell's 1984 and Animal Farm (you can't make this stuff up.) But that's nothing compared to what an Amazon customer in Norway now claims the company has done: shut down her Amazon account permanently and locked her Kindle -- all without explanation.

When her ebooks became unavailable, Linn Jordet Nygaard, the customer in question, contacted Amazon to find out what had happened. She received the following reply:

We have found your account is directly related to another which has been previously closed for abuse of our policies. As such, your Amazon.co.uk account has been closed and any open orders have been cancelled.

But the account holder claims to know nothing about any other account, and so she wrote back asking for more details: As previously advised, your Amazon.co.uk account has been closed, as it has come to our attention that this account is related to a previously blocked account. While we are unable to provide detailed information on how we link related accounts, please know that we have reviewed your account on the basis of the information provided and regret to inform you that it will not be reopened.

Please understand that the closure of an account is a permanent action. Any subsequent accounts that are opened will be closed as well. Thank you for your understanding with our decision.
Unhelpfully, then, Amazon simply re-iterated that the newly-closed account was "related" to another, previously blocked account, wouldn't say why, and emphasized that this was an irrevocable ban, even to the extent of refusing to allow the person accused of this unspecified transgression to open any other account at any point in the future.

Again, Jordet Nygaard not unreasonably sought to find out what the problem was so that she could try to address it. This time, she received an email that is not only willfully unhelpful, but positively insulting thanks to a cheesy veneer of bogus sympathy that has been added for good measure:

We regret that we have not been able to address your concerns to your satisfaction. Unfortunately, we will not be able to offer any additional insight or action on these matters.

We wish you luck in locating a retailer better able to meet your needs and will not be able to offer any additional insight or action on these matters.

Of course, this is a totally Kafkaesque situation: found guilty of a crime you are not allowed to know, with no way to appeal. Over on Boing Boing, Cory Doctorow has an interesting theory about what might be the issue here: I'd further speculate that the policy violation that Linn stands accused of is using a friend's UK address to buy Amazon UK English Kindle books from Norway. This is a symptom of Amazon's -- and every single other ebook retailer's -- hopelessness at managing "open territory" for ebooks.
That sounds very plausible, and means that Jordet Nygaard is essentially being punished for the publishing industry's incompetence when it comes to operating in a global online market, where national boundaries make no sense. Bad as that is, it's only a side issue here. What's most troubling is that Amazon not only closed down Jordet Nygaard's account, forbade her from ever opening up one again, and refused to discuss any aspect of its actions with her, but that it apparently has the capability to lock her out from all Kindle ebooks on any device -- and did so.

If you didn't take the hint when Amazon erased a couple of Orwell's books back in 2009, maybe this latest case involving the alleged remote lockout from all ebooks will finally get across the key message here: those Kindle ebooks you thought you had purchased, are actually only rented to you, and can be denied to you without explanation, and without recompense, any time Amazon wants to. The only ebooks you will ever truly own are those stored in open formats without DRM, which therefore allow backups to be made, and used anywhere.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

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Studio To Amazon Instant Video Customer: Thanks For The $$$. Enjoy Your Blank Screen.

Tim Cushing — Thu, 18 Oct 2012 05:24:48 PDT

The best way to combat piracy is to offer content at a reasonable price, make it easily accessible and hamper it with as few limitations as possible. Very, very slowly, the major studios are coming around to this line of thinking. A few tentative (and pretty much awful) steps have been taken, but it seems that for every minute, baby step forward, the motion picture industry staggers several steps back.

Case in point: Amazon's Instant Video service, which has "over 100,000 top movies and TV shows to rent or buy." This includes many new releases, and the purchaser can stream the movie indefinitely and at any time to compatible devices. The purchaser also has the option to download the movie to a PC or Kindle Fire for viewing without an internet connection.

It all sounds like a pretty good deal, until you realize that the words "indefinitely" and "any time" mean something completely different to the studios.

Consumerist reader Rebecca found this out the hard way, when she purchased Puss In Boots for $14.99 from Amazon, believing that, per Amazon’s marketing, she would be able to watch the movie when she wanted and for as many times as she wanted.

And all was going well for a few weeks until Rebecca went to stream Puss In Boots and instead saw a message stating that the film was no longer available for viewing.

As Rebecca found out, "any time" means "any time the studio is not currently milking every last dollar out of its latest release by shuffling it in and out of rental, PPV and premium cable windows." Why these windows should matter to someone who has already paid for the movie is beyond me. After all, the purchaser should be able to set his or her own "window," starting from the point they paid for the movie and going forward.

Amazon's marketing seems to agree with this customer-friendly "any time window." But once something like this happens, the real details come out. Rebecca contacted Amazon for some clarification on this ~~bullshit~~ "anomaly" and received this:

Due to licensing restrictions, videos can become temporarily unavailable for viewing or downloading. The video will automatically be made available again once that restriction ends.

Availability of videos for purchase, re-download, or access from a backup copy is determined by the owners of the content. On very rare occasions, a video you previously purchased may become unavailable.

Well, that's kind of crap. The video you "previously purchased" may become "unavailable" at the whims of "THE OWNERS OF THE CONTENT." No doubt wrinkles of incomprehension form on the brows of studio and label execs when customers make bizarre claims of "ownership" after purchasing movies and music. According to the execs, they only "licensed" the content to you (with all the billions of lousy stipulations that transaction entails). [Unless you're Eminem and demanding to be paid larger "license" royalties. In this specific case, you were sold actual songs.]

While this studio chicanery is nothing new, especially when it comes to digital goods, Amazon isn't helping matters by burying the exceptions and limitations that come with purchasing "indefinite" access. The licensing restrictions Rebecca had detailed for her by Amazon appear nowhere on the purchase pages. In fact, the "Amazon Instant Video Usage Rules" page carries none of this information either. Instead, it gives you this phrase and link:

Viewing Period: Indefinite — you may watch and re-watch your purchased videos as often as you want and as long as you want (subject to the limitations described in the Amazon Instant Video Terms of Use).

The TOS link brings you to a less-than-helpful wall of text, leaving the purchaser to scroll up and down before finding the pertinent information that explains exactly why something they purchased is unavailable.

Purchased Digital Content will generally continue to be available to you for download or streaming from the Service, as applicable, but may become unavailable due to potential content provider licensing restrictions and for other reasons, and Amazon will not be liable to you if Purchased Digital Content becomes unavailable for further download or streaming. You may download and store your own copy of Purchased Digital Content on a Compatible Device authorized for such download so that you can view that Purchased Digital Content if it becomes unavailable for further download or streaming from the Service.

Nice, huh? For any reason, your purchase may be limited, unavailable or removed completely by the "content provider." Amazon suggests (when it's done letting you know that "hey, not our fault") that the purchaser download and store their own copies to avoid being locked out of their purchases by the content providers. Well, thanks for the suggestion, Amazon, but even that half-assed "workaround" is useless thanks to the fact that the content provider can also make purchases "unavailable for further download." It's not as if Dreamworks is going to send an email blast letting customers know that their purchased streams are about to vanish thanks to a six-week run on pay-per-view. And the studios certainly aren't going to tell customers "Download now because we're yanking that movie from Amazon completely." Everyone involved would just rather the problem be dealt with when the angry emails start pouring in, if at all.

Now, Rebecca obviously prefers streaming, so getting shafted by the studios probably isn't going to drive her to massive torrenting. What it may do, however, is send her towards streaming services like Amazon Prime or Netflix. Because of its shortsighted urge to drain every last penny out of "Puss in Boots," Dreamworks seems willing to sacrifice actual "digital dollars" from Amazon Instant Video for the "digital dimes" of other streaming services. Of course, if the studio already has your $14.99, it's probably not very concerned about how satisfied you are with the spotty availability of your purchased ~~movie~~ license. It's not like Rebecca can return it. All she can do is wait for Dreamworks to reopen her (prepaid) window.

Streaming is becoming the preferred option for movies and music and Hollywood seems to be willing to fight it every step of the way. It's sad and it's ugly. The industry has crippled Hulu and Netflix (while offering nothing comparable of their own) and now seems ready and willing to kick Amazon and its customers around for as long as it can get away with it. It's one thing to play stupid games with content when customers are playing a flat rate for "all you can watch." It's quite another to yank content away from customers who have paid directly for a title at prices that rival a physical DVD purchase. That's not a "business model." That's abusing your customers for fun and profit.

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Jeff 'One Click' Bezos Once Again Concerned About Patents

Mike Masnick — Wed, 17 Oct 2012 15:12:39 PDT

About a dozen years ago, Amazon's Jeff Bezos (taking a fair amount of criticism for his one-click patent) helped fund a project called BountyQuest, which offered up prize money for those who were able to bust bogus patents. To his credit, the first patent they put forth was Bezos' own one-click patent -- except then very little happened, and BountyQuest faded away. While it has occasionally used its own patents (such as suing B&N over that one-click patent), Amazon tends to be on the receiving end of tons of ridiculous patent lawsuits, leading Bezos to speak out about the broken patent system yet again in an interview with the UK publication Metro:

"Patents are supposed to encourage innovation and we’re starting to be in a world where they might start to stifle innovation. Governments may need to look at the patent system and see if those laws need to be modified because I don’t think some of these battles are healthy for society. I love technology, I love invention, I like rapid change, and really it’s the golden age of wireless devices and mobile devices."

I'd argue that the "starting to" understates where we are in this process. There's significant evidence that the problem has been around for a long, long time already. Of course, I'm curious just what kind of legislation Bezos thinks is right. Having his voice added to the debate on patents certainly would be helpful, given how so many in Congress still seem to think that there isn't a real problem here.

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Book Publishers Latest War On Technology: How Dare You Share Your Kindle Highlights! [Updated]

Mike Masnick — Thu, 20 Sep 2012 03:25:31 PDT

Update: Though it still seems like a strong possibility that publisher demands are behind this, several commenters and other sources have pointed out that it's just as likely to have been Amazon's decision. We mistakenly stated that Amazon implied they were acting at the publishers' behest, but that was a misreading of the quote from Findings and has been corrected.

It's really quite amazing how some folks who came up through the old publishing world seem to have a near allergic reaction to new technologies that are somehow "different." You may recall the previous freakouts over text to speech, library lending of ebooks and efforts to scan physical books into ebooks. The latest horror? Highlighting. Yes, be afraid, you modern techno-wizzes. The publishing gods are afraid of your ultra-hip and modern "highlights" via the Kindle, because (*gasp*) they might be... (ominous music)... shared! Yes... I said it: shared.

A startup called Findings had been offering a neat little feature via the Kindle, that would allow people to sync and share the text that they highlight on the Kindle. You could see all sorts of ways that this could be interesting, informative and useful. But, all that the traditional book people saw was "ohmygosh! that could be used for piracy!" At least that appears to be what happened, leading Amazon to tell Findings that it was cutting off the service, ~~and making it clear that this was due to publisher complaints.~~

As that article notes, publishers can (and do!) already limit how much you highlight -- can't have you highlight too much, now -- so it's not like the concern was that you'd just highlight the whole thing and release that on the world. It just seems like a knee jerk reaction to a useful feature that is somehow too different.

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This Goes Beyond Tablets: Apple, Amazon & Google Are Betting On Economic Philosophies

Mike Masnick — Thu, 13 Sep 2012 12:36:00 PDT

Amazon's recently-announced tablets are interesting for a variety of reasons, including that Jeff Bezos made it quite clear that he's taking a very different approach to the market than the one Apple has taken. Lots of attention was (quite reasonably) paid to Bezos' key line:

"We want to make money when people use our devices, not when they buy our devices."

It's a great line in so many ways, because it highlights the different philosophies of Amazon and Apple. John Gruber's summary of those differences is a really worthwhile read (you should read the whole thing). His take on that particular line is dead-on:

Bezos's we want to make money only when you use it framing works two ways. First, it explains the Kindle Fires' noticeably lower retail prices in a way that doesn't make them seem cheaper, only less expensive. It frames Apple's prices -- and profit margins -- as greedy. Second, it works as a sort of guarantee -- if you don't actually use it, we won't even make any money on it.

Later Gruber made a second point that got me thinking (and rethinking...)

Apple's goal is to sell as many iPads as it can. Amazon's goal is to sell as many Kindle Fires as it can to a specific audience: active Amazon.com customers.

I've talked in the past about how Apple's digital goods sales have really been about being the "low margin" leader (if not the loss leader) to drive more sales of the hardware. The digital goods -- content and apps -- make the hardware much more valuable and help drive up the amount people are willing to pay. And that tends to fit with the basic economics I believe in: focus on using the "abundant" (digital) to make the "scarce" more valuable, for which people will pay a premium, especially since that "scarce" can't be "pirated." Apple has, in many ways, put that particular economic concept at the center of how it does business, even if I'm uncomfortable with the closed nature of its overall setup around that.

Amazon, however, has flipped the equation. Their "low margin leader" is the hardware, and they basically appear to want to make their money up on the digital goods purchases. Just as Apple doesn't lose money on selling digital goods (it just makes a very little amount), it appears that Amazon will be making only a little bit on the hardware, but hopes to make the big money on selling the abundant: digital goods via the Kindle store.

I will admit that I struggle with this a bit. I find it hard to bet against Bezos, because on an awful lot of things I think he makes the right bet. Plus, frankly, I'm a lot more comfortable with Amazon as a platform than with Apple. Finally, from a consumer standpoint, I think Apple's hardware seems really overpriced, but Amazon's new prices are really compelling. But economically speaking, there's a voice in the back of my head that says that Apple has this right and Amazon has this wrong. Apple is betting on using the abundant to increase the value of the scarce and then selling that. Amazon is betting on using the scarce to increase the ability to sell the abundant. Perhaps it works because of Amazon's closed Kindle platform and its dominance in the market allows it to make this counter-economical bet. Artificial limitations allow for such things, and Amazon's got the power to control a large segment of the ebook market, which really helps the company out.

In the long run, though, if a competitive market is truly created, it seems more likely that there will be more pricing pressure on Amazon's bet than on Apple's. But, in the short term, Amazon's flip-flopped market certainly could make a lot of sense.

Of course, if you really want to make this fun, just add Google to the equation. It, like Amazon, seems to be focusing on cheap, barely profitable hardware, a la the Nexus 7. It's also put a big effort (recently) into selling digital goods via the Android "Play" store. But Google's business has always been about ads, so it actually adds a third factor to how it views the world, and which part of the business subsidizes which other parts of the business.

In the end, you're left with three big bets on tablets, with very different underlying business models*:

Apple: High margin hardware (scarce); make just a little on digital goods (abundant).
Amazon: Low margin hardware (scarce); make the real margins on digital goods sales (abundant)
Google: Low margin hardware (scarce); make some margins on digital goods (abundant), but cross subsidize both with the ad business.

* Yes, there's also Microsoft Surface tablets. For the life of me, I can't figure out where they place in this particular chart. Which may say something all by itself.

Which strategy works in the end may say a lot about how you view the world economically.

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Ebook Authors Continue To See Self-Publishing Stigma Disappear

Timothy Geigner — Tue, 11 Sep 2012 00:06:00 PDT

As the recent news about ebooks has mostly revolved around the price-fixing settlement that was just approved, it's worth pointing out, or reiterating, how the ebook market continues to take off despite being a digital marketplace with all the same potential pitfalls as the recording industry. Despite those potential troubles, we continue to see a rise in the popularity and saleability of self-published authors, long sufferers of the antiquated myth that if you weren't published by a big publishing house you weren't really published at all.

Take this recent story from CNN, which details how Amazon coincided their release of several new e-readers and tablets with a press bit showing how 27 of the top 100 Amazon eBooks are Kindle Direct Publishing books. Considering the outlook on self-publishing before e-publishing came to be somewhat commonplace, numbers like this are significant.

"Most of my months are six-figure months," said Hugh Howey, a 37-year-old Florida author whose "Wool" series of digital books was highlighted by Amazon. "It's more than I ever hoped to make in a year."

The company says some authors, including Theresa Ragen, who appeared in a promotional video during the Amazon event, have sold hundreds of thousands of books.

The article goes on to note how some of these now-successful self-published authors are the same people that could have given up after receiving a dozen rejection slips for their books from agents and publishers. Perhaps more to the point, twenty years ago these authors would have been forced to give up on those books, because the publishing companies were the gatekeepers and publishing books only worked economically because of the kind of scale those publishers could command. Digital printing alleviated some of the need for that scale and allowed for self-publishing, except that then a combination of publishers and brick-and-mortar bookstores acted as the next barrier for self-published authors, such that few in the public could even find a way to buy these books.

With the rise of the eBook, the only remaining barriers are the ability to get noticed and the ablility to write a compelling book.

"Fact is that authors no longer need a publisher," Bernard Starr wrote at The Huffington Post. "And more and more writers are awakening to the realization that if you are not a high-profile author who can command large sales, a traditional publisher will do little for you beyond editing and printing your book."

For Howey, author of the "Wool" series, the direct-publishing platform has opened up a life he never imagined was possible -- one where he is paid to write full-time.

Experiences like Howey's are important to highlight, because the inevitable response from detractors of eBook self-publishing will be to point out that it is only a small percentage of self-published authors that are making significant money. Even the CNN article says as much. My response is simple: so what? Did the old system, under which publishers and bookstores acted as gatekeepers, not have similar results, with only a fraction of authors making significant money from their books? And what of all the authors and books who would never be heard under that system? What of the manuscripts that would lay dusty and alone in the drawer?

That is the true benefit of self-publishing in the digital age. As the barriers come down and sales go up, the stigma of self-publishing will be buried under all the dollars previously un-published authors are collecting. This despite their playing in a digital realm that would be open to piracy, if people simply refused to support authors. But that isn't happening. Sales are on the rise, and culture is rising with them.

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Disruption Starts With A Foot In The Door: Amazon's New Data Plan Is Limited But Potentially Revolutionary

Mike Masnick — Thu, 6 Sep 2012 13:13:00 PDT

Amazon announced a ton of new ereader/tablet devices this morning, which is being covered to death on the various gadget blogs out there. While some of the devices look interesting (and could put some pricing pressure on other tablets), what caught my eye was the addition of a 4G LTE mobile data plan on the Kindle Fire HD. It's $49.99 for the year, though it's limited to just 250MB per month -- which is tiny. Amazon has included mobile data before in its Kindles, but those were strictly for books (which don't take up that much data). As they go further into the fully functional tablet world, this starts to become more interesting. That's because mobile data continues to be something of a racket, with just a few national providers: Verizon, AT&T, T-Mobile and Sprint (and there are limitations there). The pricing offered by those guys always seems to border on collusion (amazing how closely they track each other's pricing changes) and is always focused on keeping the prices very high.

Amazon's offer here is a way to tiptoe into that pool with something of an alternative. Yes, they're just piggybacking on someone else's network via some sort of MVNO (mobile virtual network operator) agreement, so you're still really using one of the national carriers' networks. But from a consumer standpoint, it is offering something of an alternative for mobile data, at much more reasonable prices (though, obviously, the super low caps match that super low pricing). That, alone, doesn't revolutionize mobile data pricing, but it does seem like a way for Amazon to get its foot in the door and expand over time. Amazon has a long history of figuring out ways to do things in a consumer-friendly manner, even if it means undercutting others to do so (which has made it a few enemies). In the presentation itself, Jeff Bezos noted that they're focused on making money elsewhere -- basically as people buy things via the device -- and thus the company has tremendous incentive to keep the prices of the devices and the service quite low. And that has the potential to be quite disruptive.

In some ways, I look at it as similar (in a very different context) to Google's fiber effort in Kansas City. In both cases, you have companies sort of dipping their toes in the water of ancillary markets that make their primary markets more valuable. They're very limited at this time, and many people may brush them off as being useless. But that's what always happens with The Innovator's Dilemma. Offer something simple and small, and the legacy players brush it off as too small or too limited to matter. But keep improving on that, and you undercut legacy providers without them fully realizing what's happening -- often because you're using your tiny and "weak" efforts there to actually enhance your primary market, where the traditional players have no presence.

Lots of people are reasonably mocking the 250MB limit. It is kinda useless. But, look at it as a wedge, and the beginning of the climb up the innovation slope, making Amazon's core business more valuable... and things could actually get quite interesting.

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Judge Quickly Approves Ebook Pricing Settlement; Says It's In The Public Interest To Stop Price Fixing

Mike Masnick — Thu, 6 Sep 2012 12:12:00 PDT

Judge Denise Cote wasted no time at all in approving the DOJ's settlement with three book publishers in its antitrust lawsuit over ebook pricing. While there had been some concerns about the settlement, the judge saw no problem with it at all, and very quickly issued an order approving the settlement (pdf) between the government and HarperCollins, Simon & Schuster and Hachette (the case against others, and Apple continues). The terms of the settlement are straightforward:

They must terminate their Agency Agreements with Apple within seven days after entry of the proposed Final Judgment.
They must terminate those contracts with e-book retailers that contain either a) a restriction on the e-book retailer’s ability to set the retail price of any e-book, or b) a “Price MFN,” as defined in the proposed Final Judgment, as soon as each contract permits starting thirty days after entry of the proposed Final Judgment.
For at least two years, they may not agree to any new contract with an e-book retailer that restricts the retailer’s discretion over e-book pricing.
For at least five years, they may not enter into an agreement with an e-book retailer that includes a Price MFN.

Cote basically said that this is a perfectly straightforward price fixing case, and the settlement directly counteracts the price fixing issues, so there's no reason not to just move forward with it.

The Complaint and CIS provide a sufficient factual foundation as to the existence of a conspiracy to raise, fix, and stabilize the retail price for newly-released and bestselling trade e-books, to end retail price competition among trade e-books retailers, and to limit retail price competition among the Publisher Defendants. Although the Government did not submit any economic studies to support its allegations, such studies are unnecessary. The Complaint alleges a straightforward, horizontal price-fixing conspiracy, which is per se unlawful under the Sherman Act.... The Complaint also details the defendants’ public statements, conversations, and meetings as evidence of the existence of the conspiracy. The decree is directed narrowly towards undoing the price-fixing conspiracy, ensuring that price-fixing does not immediately reemerge, and ensuring compliance. Based on the factual allegations in the Complaint and CIS, it is reasonable to conclude that these remedies will result in a return to the pre-conspiracy status quo. In this straightforward price-fixing case, no further showing is required.

Because of this, Cote rejects the idea of any evidentiary hearing and just approves the deal. She notes that due to tons and tons of public comments that were allowed in the case, she is quite well informed of the issues and sees no additional benefit from such a hearing:

It is not necessary to hold an evidentiary hearing before approving the decree. Given the voluminous submissions from the public and the non-settling parties, which describe and debate the nature of the alleged collusion and the wisdom and likely impact of settlement terms in great detail, as well as the detailed factual allegations in the Complaint, the Court is well-equipped to rule on these matters. A hearing would serve only to delay the proceedings unnecessarily.

She does try to summarize the comments against the settlement into four broad categories: (1) that the settlement would harm third party players like indie book stores, indie ebook retailers, indie publishers and authors, (2) that the settlement is "unworkable," (3) that there weren't enough facts to support the price fixing claim, (4) that the impact of such price fixing was actually pro-competition, in that it broke up Amazon's market dominance. She then breaks down each of these arguments to show why none of them apply and the settlement should move forward.

I won't go through all four issues, but I would like to focus on the two that get the most attention, the first and the last. On the first issue, she points out that antitrust law is not designed to protect businesses from the working of the market, but to protect the public from the failure of the market. If the settlement causes some businesses to suffer, but it's in the public interest, there is no problem there.

If unfettered e-books retail competition will add substantially to the competitive pressures on physical bookstores, or if smaller e-book retailers are unable to compete with Amazon on price, these are not reasons to decline to enter the proposed Final Judgment.

As for the last issue (breaking up Amazon's dominance), she notes that it was "perhaps the most forceful species of criticism" but still does not find it persuasive here. The court more or less notes that Amazon's market position isn't on trial, and its use of wholesale pricing does not equal price fixing, as some have alleged. Nor does it show "predatory" pricing, which was a key complaint. The problem there: the evidence showed that Amazon was "consistently profitable." And, to show predatory pricing, "one must prove more than simply pricing below an appropriate measure of cost" but also that the company will jack up prices down the road. And all of the comments failed to do that:

None of the comments demonstrate that either condition for predatory pricing by Amazon existed or will likely exist. Indeed, while the comments complain that Amazon’s $9.99 price for newly-released and bestselling e-books was “predatory,” none of them attempts to show that Amazon’s e-book prices as a whole were below its marginal costs.

Oh, and finally, the court points out that swinging back the blame to Amazon is meaningless for the purpose of this case, anyway, because even if the court accepted that Amazon was price fixing too, that doesn't make it okay for the publishers to price fix themselves. Think of it as the "two wrongs don't make a right" rule.

Third, even if Amazon was engaged in predatory pricing, this is no excuse for unlawful price-fixing. Congress “has not permitted the age-old cry of ruinous competition and competitive evils to be a defense to price-fixing conspiracies.” ... The familiar mantra regarding “two wrongs” would seem to offer guidance in these circumstances.

This probably does not bode well for the other publishers and Apple who are fighting the whole thing...

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DailyDirt: The Future Of Storage

Michael Ho — Mon, 27 Aug 2012 17:00:00 PDT

Storing digital data can be unreliable if you want it to last a really long time. But there are many ways to store vast amounts of data, and if you're not in a hurry to retrieve the data, it can be somewhat cheap to maintain an enormous amount of information nowadays. Here are just a few examples of storing LOTS of data in somewhat unconventional ways.

Printing at about 100,000 dots per inch in full color has been achieved by researchers at the Agency for Science, Technology and Research (A*STAR) in Singapore. As a proof of principle, a test image of Lenna was formed on a silicon wafer covered with a nanoscale metal coating. [url]
Amazon is starting to offer archival storage for just $0.01 per gigabyte per month. This Glacier storage service is aimed at replacing old tape archives and geographically distinct facilities, but retrieving the data isn't so convenient: data retrieval requests can take hours (hence the name Glacier) and there's also a retrieval fee after you've accessed more than 5% of your data vault in a month. [url]
Geneticists in Boston have stored a 5.27-megabit book (containing 53,246 words, 11 JPG image files and a JavaScript program) on DNA. This is the highest density of non-biological data ever encoded by DNA, and a gram of material could store 455 exabytes of data. [url]

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

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DailyDirt: Tools For The Blind

Michael Ho — Tue, 14 Aug 2012 17:00:00 PDT

Visually impaired folks have access to more technology than ever before. Despite various setbacks that prevent some ingenious innovations, plenty of developers are still working on hardware and software tools to help out people with disabilities. Here are just a few examples of some interesting projects for the blind.

An iPhone app called VizWiz helps blind users by letting them take a picture of something that is confusing -- and then crowdsourcing a helpful description to make things clear. This app uses Amazon's Mechanical Turk service to obtain helpful people, and the average turnaround time for a description is 27 seconds. [url]
The Poet image description tool is open source software that helps to crowdsource image descriptions for digital books. This tool is aimed at textbook illustrations that aren't too helpful for people who can't see them. [url]
The Tacit project is developing a hand-held sonar device with haptic feedback -- a technological take on the white cane. It's still just a prototype device, but so far, users seem to be able to use it fairly quickly without much training. [url]
Haptic shoes could help people navigate by vibrating different parts of the shoe to tell the wearer if there are obstacles ahead. These shoes, like the Tacit project's handheld, are based on open Arduino hardware -- allowing other developers to contribute improvements and build upon existing tools. [url]

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

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