Techdirt. Stories filed under "jobs"

Rice University Professor: SkyNET's Gonna Take Ur Jerbs!

Timothy Geigner — Fri, 17 May 2013 19:39:00 PDT

It's sad to note how collective humanity has done an ostrich on the warnings about the machines. Still the NFL exists, robbing us of our best and brightest, who will no longer be available for the coming war with SkyNET. Conferences on what to do about the surely coming robot horde have produced little in the way of a path forward and have gone relatively unreported in any case. Due to this, we know very little about what form the non-existent threat of terminator-like metal monsters will take. Will they simply wage war against us? Will they syphon our body heat for energy? Will they farm our skin and dance around in it to Goodbye Horses, like some kind of graphite Buffalo Bill?

Not according to Rice University professor Moshe Vardi, who claims that they have a far more terrifying plan in store: displacing the human workforce.

Pictured: A Rice University professor in the near future
Image source: CC BY 2.0

According to Vardi, sometime around the year 2045, you won't have a job any longer because the robots will have taken it away from you.

In recent writings, Vardi traces the evolution of the idea that artificial intelligence may one day surpass human intelligence, from Turing to Kurzweil, and considers the recent rate of progress. Although early predictions proved too aggressive, in the space of 15 years we’ve gone from Deep Blue beating Kasparov at chess to self-driving cars and Watson beating Jeopardy champs Ken Jennings and Brad Rutter. Extrapolating into the future, Vardi thinks it’s reasonable to believe intelligent machines may one day replace human workers almost entirely and in the process put millions out of work permanently.

Well, looking back through the history of technological progress, you can certainly see his point. And once you've seen that point, you can laugh at it. And once you've laughed at it, you can call his local police station and request that they remove any science fiction movies from his home by force, because he's clearly seen too many of them.

The problem with thinking that artificial intelligence is going to replace us in the workforce is two-fold. First, it cheaply ignores the impact every other form of technological progress has had thus far. Robots are used on assembly lines, yet there's no drastic net loss of jobs. When the automobile was invented, it isn't as though the buggy whip makers simply died off in unemployed starvation. There are other jobs to be had, most often created as a direct result of the advance in technology. Assembly line workers become machinists. Buggy whip makers go to work for the auto companies. There can be pain in the market in the short term as it is disrupted, but on a long enough timeline everything seems to even back out.

The second problem is the failure to recognize that people value some products and services provided by our fellow meat-sacks. Can auto-attendant systems handle phone duties? Sure, but there are tons of companies that specifically advertise the concept of customers being able to talk to a "real" person. Can machines make rugs? Yup, yet there's a huge market in hand-woven rugs out there. And the service industries rely heavily on personality. A machine might be able to serve me my beer at my local watering hole, but will it listen to me complain about my job if I'm having a crappy day? Will it be able to offer me an opinion on which wine is the best on the menu? And, as the article notes, what if any workforce disruption that does occur is desirable?

Perhaps in the future, while some of us work hard to build and program super-intelligent machines, others will work hard to entertain, theorize, philosophize, and make uniquely human creative works, maybe even pair with machines to accomplish these things. These may seem like niche careers for the few and talented. But at the beginning of the Industrial Revolution, jobs of the mind in general were niche careers.

I call dibs on being the new Socrates.

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Oh Look, The Number Of People Employed In The Movie And Music Recording Business Just Hit An All Time High

Mike Masnick — Thu, 11 Apr 2013 12:47:46 PDT

The common refrain coming out of the MPAA and RIAA over the past few years has really focused on "jobs, jobs, jobs!" This is a message that often works with Congress. If you can convince Congress that "jobs" are at risk, they go scrambling to protect those jobs, even if the economy would be much better off with obsolete jobs going away, and better jobs taking their place. That said, the MPAA and RIAA have a long history of making up ridiculous claims about the number of people employed in their industries, as well as the number of supposed "lost jobs." So it's rather noteworthy to see that the good folks over at ZeroHedge have pointed out that, according to the Bureau of Labor Statistics (BLS), jobs in the motion picture and sound recording industries hit an all time high in December. Funny that. I thought that they were losing jobs like crazy, and that without SOPA those jobs would just keep disappearing. Hmm...

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Satan Finally Reveals Himself As A Legal Employer

Above The Law — Thu, 21 Feb 2013 19:58:00 PST

Cross-posted from

I think that every lawyer feels that they have been employed by Satan at one time or another. It’s just like how criminals end up working for Keyser Soze without knowing it. Whether he’s running your firm from a corner office, or he’s a client you end up representing, most lawyers end up working for the devil at one time or another.

Usually, Satanic jobs and assignments try to appear normal. But that job market is really tight. Evidently, it’s such a buyer’s market that Satan doesn’t feel like he has to hide his true nature anymore. He’s now openly advertising to hire some new associates on Craigslist….

To some, it might appear surprising that the devil needs help securing water rights in flood-soaked Nashville. But as I see it, Nashville is pretty much a hellhole, and Satan is much more likely to need water than, say, fire. From Craiglist:

My principal place of business has experienced unusually aggressive expansion as of late and this has resulted in a number of significant legal problems. Consequently, my current legal staff is unable to complete all the electronic discovery necessary for an upcoming class action riparian rights lawsuit…

As you may know, my business has been around for centuries and I work very diligently to ensure that as FEW new attorneys as possible are able to get their feet in the doors in this city or any other city for that matter. However, given these unique circumstances, I am willing to make an exception or two.

Kind regards,

Satan

There's a screen shot of the full ad below.

Alas, the devil is in the details:

Compensation: Your soul and your student loans (also, jellybeans).

They say that the devil’s greatest trick was to convince the world he didn’t exist. But I think it’s more impressive that the devil is able to get so many people to do his bidding even when he tells them the truth. Let’s be honest, there are thousands of unemployed attorneys who would gladly sell their soul for a chance at a good job. There are people waiting in line to sell their souls. Better to reign in hell than serve in heaven? Unemployed lawyers will settle for serving in hell rather than waiting for heaven to grant them a job.

And since I have nothing else to add, let’s all watch Al Pacino physically blow Keanu Reeves off the screen in the scene that totally redeems this movie:

“Lose? I DON’T LOSE, I win. I WIN. I’M A LAWYER, THAT’S MY JOB, THAT’S WHAT I DO.” Trust me, every time I talk to a prospective law student, I hear a very confused Keanu doing a bad southern accent as I slowly explain to him what is obvious to everybody else. I’M A FAN OF MAN.

More stories from Above The Law:

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Robots Or Robber Barons? What If The Answer Is Both And Neither?

Mike Masnick — Fri, 14 Dec 2012 12:04:00 PST

For reasons that I do not fully understand, Paul Krugman is a name that gets people really worked up for often irrational reasons -- mostly having to do with red team / blue team political arguments that have little bearing on actual economics. My personal preference is to ignore the whole somewhat meaningless "left/right" dichotomy (no matter where a particular economist is normally associated) and focus on the actual economics being discussed. And, recently, Krugman has been doing some deep thinking on what he's referred to as the question of robots or robber barons. The issue may be a little deep in the weeds for folks who aren't econgeeks, but it is both really interesting and really important to think through.

The short version -- hopefully translated sufficiently via my "econgeek to normal people" translator -- is that there are economic metrics out there suggesting that things should be much better than they are: in particular, companies are making massive profits. But, at the same time, wages are not showing any sort of increase. Krugman uses this graph to demonstrate the point: As the graphic shows, as a percentage, wages ("labor") have been dropping. If the output is not going to wages, where is it going? Krugman uses the term "capital," which, basically (in this case), just means return on investment for assets: that is, if you own stuff, you're getting a return on it, which is going into your pockets rather than to people doing work. Of course, when you look just at percentages of a single factor, things can quickly get misleading -- and at least some have suggested that looking at just the percentage going to labor may be exaggerated by a hidden third factor, such as land. While using terms like "labor" and "capital" are standard in economics, I find that they actually can distort the conversation (and even Krugman notes that some of the discussion veers into what sounds like "Marxist" discussions on "capital" and "labor").

A simpler and perhaps more useful way of looking at things is: Where is the money going and how is it spent? And, as it stands now, over the past ten years, the amount of money going to wages, as a percentage of money being made, has been going down. So what's it all mean? Krugman has two theories -- both of which may actually be true to varying degrees.

Robots: The idea here is that automation has meant fewer jobs, and thus has held down wages and kept the supply of workers high. This is an old argument, of course, but perhaps one worth thinking about. We'll discuss it more below.
Robber barons: That is, monopolists. The argument here is that when you see an aggregation of wealth to "capital," it suggests that the free market is somehow "stuck," and one possible reason is that the "owners of capital" have effectively created monopolies, allowing them to retain more than a free market might allow, via monopoly rents.

If you think both of those suggestions sound somewhat anachronistic, you're not wrong. Both of those possible arguments sound quite similar to the complaints people made a century or so ago. And, as with that situation, I'd argue that the two explanations that Krugman puts forth may both have some element of truth, but also may not tell the whole story by a long shot.

Let's start with the robots. For years, many have suggested that greater productivity from automation leads to lower demand for human employees, thus creating less demand for workers -- leading to lower salaries, high unemployment and all that jazz. Many people (myself included) have often used the term "luddites" for this, after the original followers of Ned Ludd, who believed that the industrial revolution was destroying jobs, leading to the "Luddites" smashing machines. The term is used pejoratively, because the original Luddites, for the most part, weren't just wrong but were ridiculously wrong. Far from destroying jobs, automation eventually created many new jobs.

And, instinctively, I have the same reaction to the argument when put forth here. We've heard this claim for so long, that greater productivity leads to fewer jobs -- but in practice it has never come true. It has, certainly, meant that there has been job displacement, and potentially a shift in job skills requirements -- which can be very difficult for those whose skills are no longer relevant. But, in the longer term, such automation has always created more jobs.

Does that necessarily mean that this shall always be the case? Not necessarily, but I'd argue that the long history of it being true suggests that you would need very, very strong evidence to back up the claim this time around -- and I'm not convinced we've seen that. Of course, playing devil's advocate to myself, I can see one plausible argument that someone could make (even if I don't think it's true): automation in physical work increased demands for jobs in other sectors -- such as services and information processing (desk jobs). But the information age revolution has now started to automate many of those jobs as well, and it's not clear where we move along the spectrum from there. That is, as the argument goes, that new jobs have always been created further along the spectrum from manual labor to services to information processing, but we've more or less hit the end of the line.

I find this difficult to believe for a few reasons. First, the same argument was made in the past every time some new fears about automation came along. And every time it turned out that there were new job opportunities. I can't see that changing now. At all. If it becomes true that labor is really increasingly available or cheap, that will create all sorts of new opportunities to make use of it. The news that Apple is going to start making some computers in the US is just a small indication of that possibility coming true. And, yes, even if they're using a robot-centric process, they're still creating domestic jobs. But, further on that, there's tremendous opportunity coming out of disruptive innovation to create new jobs where none really existed previously. The number of people making a living by selling goods on things like eBay, Etsy or Amazon is astounding. Even newer tools like Kickstarter and Indiegogo are creating additional possibilities, and we write about all sorts of interesting business models all the time -- creating new opportunities. Similarly, we've seen things like distributed call center services, such that people can work from home and be productive. In fact, this could help explain some aspects of wage decline, as some people, who might have formerly not been in the workforce at all, can now work part time from home.

But, of course, job displacement is messy, and figuring out where the new job opportunities are, and how they apply on a wider scale, is not a smooth process at all. It takes time to work out the kinks -- and that could explain the lag in wages. It could simply be the dip in efficiency as we enter that chaotic period of experimentation and attempts at new things before it becomes more clear where the new job opportunities will be.

The "robber baron" argument makes a lot more sense to me -- and it even appears that Krugman may be leaning bit more that way, after hearing from some other economists:

Barry Lynn and Philip Longman have argued that we're seeing a rapid rise in market concentration and market power. The thing about market power is that it could simultaneously raise the average rents to capital and reduce the return on investment as perceived by corporations, which would now take into account the negative effects of capacity growth on their markups. So a rising-monopoly-power story would be one way to resolve the seeming paradox of rapidly rising profits and low real interest rates.

Of course, I think that the use of the term "robber barons" is potentially misleading as well. This isn't necessarily a case of the Andrew Carnegies, JD Rockefellers, JP Morgans and Cornelius Vanderbilts of old. Instead, it often seems that what we're dealing with are less super greedy "robber barons" (and yes, I know some people will point to examples that suggest otherwise -- especially on Wall Street) and more of a fight against innovation. This goes back to my recent discussion on corruption laundering, in which companies are able to secure favorable regulations that actually help them against disruptive upstarts by arguing that allowing the upstarts will harm "jobs" or will upset the economic apple cart.

In the end, that leads me to wonder if what we're really seeing is a third thing, which can account for both the "robots" and "robber barons" story lines and tie back to that corruption laundering situation: the rise of what Andy Kessler has referred to as political entrepreneurs vs. market entrepreneurs. In that scenario, you have companies who aren't quite robber barons, but are adept at using the political system to engage in a form of "corruption laundering" to put in place regulations that limit true competition and the kind of innovation that helps to speed up the creation of new jobs.

In some sense, we've discussed this before, in noting that politicians often fear disruptive innovation because it "destroys jobs" even as it's creating new ones. So they pass regulations that hinder disruptive innovation, in an attempt to "protect jobs." But the end result is that the few larger players in the industry tend to suck up control of that industry and, as such, limit job growth (and begin to profit by being able to capture the monopoly rents). They can employ greater automation to suck more profits out of their own business, but also can hold back the disruptive innovation that creates new jobs.

So, in that scenario, you get higher profits and fewer jobs -- with increasing automation. But you're missing out on the important disruptive innovations that help create the new jobs. Part of the problem with the "robots" storyline from Krugman is that it assumes all technological advancement is equal: that big companies automating is the same thing as disruptive innovation that enables new jobs. I don't think that's true. Either way, these are certainly big and important questions worth thinking about and exploring.

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Once Again: High Tech Jobs Are Important, Growing And Everywhere

Mike Masnick — Thu, 6 Dec 2012 23:02:00 PST

A few months ago, we wrote about a presentation from the Bay Area Economic Council, in association with Engine (I'm on their steering committee, but had nothing to do with this), showing that high tech jobs were a high point in the economy. Unlike many other sectors, those jobs were growing -- and contrary to what many believed, they weren't just concentrated in one area, but were spread out across the US. Furthermore, their economic contribution tended to be significant. Basically: the tech industry is increasingly important to our economy, and policy makers should be careful not to muck that up. This week, the Bay Area Council Economic Institute, commissioned by Engine, put out the full report on this, entitled Technology Works: High Tech Employment and Wages in the US (pdf). Once again, it highlights the importance and success of the tech industry. A few high level points:

Since the dot-com bust reached bottom in early 2004, employment growth in the high-tech sector has outpaced growth in the private sector as a whole by a ratio of three-to-one. High-tech sector employment has also been more resilient in the recent recession-and-recovery period and in the last year. The unemployment rate for the high-tech sector workforce has consistently been far below the rate for the nation as a whole, and recent wage growth has been stronger.
Employment growth in STEM occupations has consistently been robust throughout the last decade, outpacing job gains across all occupations by a ratio of 27 to 1 between 2002 and 2011. When combined with very low unemployment and strong wage growth, this reflects the high demand for workers in these fields.
Employment projections indicate that demand for high-tech workers will be stronger than for workers outside of high-tech at least through 2020. Employment in high-tech industries is projected to grow 16.2 percent between 2011 and 2020 and employment in STEM occupations is expected to increase by 13.9 percent. Employment growth for the nation as a whole is expected to be 13.3 percent during the same period.
Workers in high-tech industries and STEM occupations earn a substantial wage premium of between 17 and 27 percent relative to workers in other fields, even after adjusting for factors outside of industry or occupation that affect wages (such as educational attainment, citizenship status, age, ethnicity and geography, among others).
The growing income generated by the high-tech sector and the strong employment growth that supports it are important contributors to regional economic development. This is illustrated by the local multiplier, which estimates that the creation of one job in the high-tech sector of a region is associated with the creation of 4.3 additional jobs in the local goods and services economy of the same region in the long run. That is more than three times the local multiplier for manufacturing, which at 1.4, is still quite high.

These are all important points, but the biggest one may be that tech work encompasses so much these days. It's not just "Silicon Valley" at all, but all kinds of jobs for all kinds of companies. Tech isn't an industry. It's not just a job function. It's a part of nearly every aspect of our economy.. It makes other parts of the economy more efficient and increases opportunity in many different areas. And because of that, "tech" jobs are growing all over the place. When I see that (as the report notes) places like Boise Idaho, Augusta, Georgia and Peoria Illinois are seeing the greatest amount of high tech job growth, that's a really good sign. We run into problems when all you have is a "company town" where an entire industry is based out of one place. This isn't about "the tech industry" but the fact that every single industry is a tech industry, and tech jobs are everywhere -- and, given their economic impact, incredibly important.

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The Hobbit Took $120M From Kiwi Taxpayers - Maybe They Should Own The Rights

Mike Masnick — Wed, 5 Dec 2012 08:31:51 PST

Yesterday, we wrote about how US taxpayers were handing over approximately $1.5 billion to Hollywood to get them to film movies in certain locations -- and how little of that money actually generated jobs (though, lots of it flowed into the pockets of Hollywood studio execs). Even worse, the story highlighted how there's a nasty "race to the bottom," where Hollywood demands increasing subsidies from different locations, with promises to only film movies in the locations with those subsidies. That means more and more taxpayer money going to Hollywood, for the sake of a temporary production, which often brings in workers from LA, and has only a brief, marginal impact on the local economy -- usually much, much less than the subsidy in question.

While the NY Times article explored how this was happening in the US, a new article at Bloomberg highlights how this is happening around the globe, using key examples from the subsidies around The Hobbit and Harry Potter -- both of which involved massive subsidies in response to Hollywood threats to film elsewhere.

How much taxpayer money can Warner Bros. demand from the government of New Zealand to keep production there (rather than, say, in Australia or the Czech Republic)? That answer turns out to be about $120 million, plus the revision of New Zealand's labor laws to forbid collective bargaining among film-production contractors, plus the passage of three-strikes Internet-disconnection laws for online copyright infringement, plus enthusiastic and, it turns out, illegal cooperation in the shutdown of the pirate-friendly digital storage site Megaupload and the arrest of its owner, Kim Dotcom.

[...] The U.K. government found this out in 2005, when Warner Bros. threatened to move "Harry Potter" productions to the Czech Republic. The government of Gordon Brown caved in to studio demands and passed new subsidies. In 2009, New Zealand also gave in and now faces demands for more.

Again, if this actually created the economic activity that Hollywood claims it does, perhaps it would be worth it. But both articles highlight how this isn't true at all. It just shifts money from local taxpayers to Hollywood execs.

The worst part is that, for most of the wannabe Hollywoods, it's bad economic policy on every level. The productions bring in mostly low-end, temporary jobs, while the high-end jobs remain in Hollywood or New York. Call it the Curse of Harry Potter.

That article, authored by Joe Karaganis, who has been studying this issue for quite some time, suggests that if the public is financing these movies, then perhaps the movies should belong to the public if the studios can't pay back the loans. The suggestion is a really creative one. If the movie actually makes money, then the studios can pay back the loans. If it's a flop, then let the movie go to the public via a Creative Commons license, and let the public do something with it.

One way to break the curse is to route public money through what we might call an Expecto Patronum license -- named after the powerful defensive charm in the Potter series. Under the license, public money takes the form of a conditional loan rather than a grant or tax break. After five years, producers have a choice: Pay back the loan or re-release the film under a Creative Commons attribution license, which would allow it to be shown freely.

If a film is among the few that have longer-term commercial value, its producers can choose the first path. If it isn't, they lose nothing by taking the second route. The license thus underwrites creative risk-taking without squandering public money on blockbusters. It also ensures that public investment generates public culture -- not works controlled by the studios for the next 95 years.

It's such a reasonable idea that you know that Hollywood would freak out at any legitimate push to use it. In true "entitlement mentality," they believe such taxpayer-funded subsidies are their right, and that localities that won't pay up are missing out. Yet, as the data clearly shows, most locations would be much better off saying "no," as the benefit is minimal. Or, at the very least, they should make the terms similar to what the article suggests. If you want the public to finance the movie, then make it conditional. In the end, you pay back the loan or the public gets the movie.

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$1.5 Billion In Taxpayer Funds Go Directly To Movie Studios Each Year... And Very Few Jobs Created

Mike Masnick — Tue, 4 Dec 2012 08:55:49 PST

If you've been following MPAA boss Chris Dodd ever since the death of SOPA, you'll be aware of his stump speech. He seems to give it every chance he can: "the movie industry is all about jobs, jobs and more jobs." Of course, he lies about the number. He usually trots out his favorite 2.1 million figure, ignoring the fact that the Congressional Research Service showed it's really 374,000 people employed in the movie business.

What isn't mentioned so much (though, it depends on the audience) is the fact that various tax subsidies that different states pay to movie studios means that $1.5 billion in taxpayer money goes straight to Hollywood studios. Perhaps that would be justifiable if it created jobs. But the evidence there is actually lacking. That link involves the NY Times looking closely at Michigan, which not too long ago put in place massive subsidies for Hollywood to make movies in their state. The cost? Suffering Michigan citizens foot the bill. However, Michigan Governor Jennifer Granholm thought it was worth it because a local movie director wanted more work at home (and because, when she was younger, she had hoped to be a movie star). Lots of studios are looking to make movies in Michigan now, because the cash back from the state is way too lucrative to pass up.

Within two months, 24 movies had signed up to film in Michigan — up from two the entire year before. The productions estimated that they would spend $195 million filming there, and in return they would be refunded about $70 million in cash.

Before long, residents were rushing out on their lunch breaks to catch a glimpse of celebrities like Drew Barrymore, who was filming her movie “Whip It” in Ann Arbor, and Clint Eastwood, who was shooting “Gran Torino” in the Detroit area. Even Michael Moore, who was filming a movie about corporate welfare called “Capitalism: A Love Story,” sought and received incentives.

But does it create jobs? Not really. The story is horrifying. It involves Hollywood hotshots continually demanding more and more subsidies from the state and insisting that jobs would be plentiful as soon as they could get things up and running, but balking any time anyone asked them to put the job promises in a contract:

Ms. Granholm declared the city in a financial crisis in February 2009 and appointed an emergency manager, Fred Leeb. The city’s budget was $54 million a year, but it was overspending by an estimated $7 million to $12 million. Pontiac was also still weighted down by old incentives it had given to businesses like G.M.

The movie studio was an added challenge, since it was seeking financial incentives from the city — not to mention from other branches of the government. It won redevelopment tax credits from the federal government and separate aid from the state that included incentives for technology companies that hire residents.

Job creation became a point of contention with beleaguered Pontiac, which was being asked to waive virtually all property taxes for the studio. The investors claimed that thousands of people would be employed, but Mr. Leeb said that when he asked for job numbers to be written into the contract, the investors refused. “We started seeing some backpedaling,” said Mr. Leeb, who added that the negotiations featured “knock-down, drag-out fights.”

But wanting to bring the big lights of Hollywood to Michigan, eventually the state agreed to it. Who paid for the subsidies? Former state workers basically were forced to bet their pensions on Hollywood:

Over the objections of some local officials, the state agreed to use the state workers’ pension funds to guarantee the bonds. If the investors failed to pay, the retirees would be on the hook.

And the promised jobs? Keep looking. Sure, some crews from LA flew in, but for locals? Almost none.

The studio had created only 200 positions by the summer of 2011, according to correspondence between the company and local officials. And when temporary construction workers were excluded from the tally, Pontiac’s records show, the studio reported only two employees in 2010 and 12 the next year.

Earlier, in the article, they note that this particular project was pushed through with the promise of 3,600 jobs. You don't do that by hiring two people one year and a dozen the next.

How about tax revenue from the local operations? Yeah, big Hollywood studios have ways of avoiding paying that sorta thing, even as they're collecting millions in local subsidies:

The city later had problems collecting some of the taxes because Disney operated through a separate business entity that was difficult to track down, he said.

“This is a glamorous industry if you want to talk about Hollywood, but it’s not very glamorous for the municipality that wants to collect something,” Mr. Schimmel said. Pontiac, he said, was outgunned.

Disney declined to comment.

And... soon after that, the studios moved on to other sexier states that suddenly offering up bigger incentives than Michigan. And who did it cost? Oh yeah: remember those state workers' pensions? Yup. Them.

When the bill for the studio’s bond interest came due in February this year, it paid only a portion, $210,000. The state pension fund had to pick up the remaining $420,000....

In August, the studio defaulted on the entire $630,000 payment on the bond, despite a decision by Mr. Snyder to temporarily allocate some film incentives.

All around, it's a horror story that's being repeated in other states and countries around the globe. Hollywood studios go around pitching "jobs!" and demanding special taxpayer-funded incentives, offering giving them millions to film in a certain location. The filmmakers take the subsidies, bring in crews from LA, hire a couple people here or there... and then move on, leaving a mess in their wake. And this is the industry that is demanding even more protection from the federal government via copyright law? When is enough enough?

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High Tech Jobs Are Important, Growing... And Everywhere

Mike Masnick — Tue, 4 Sep 2012 22:03:24 PDT

A new presentation from the Bay Area Council Economic Institute combined with a data visualization from Engine (disclosure: I'm on the steering committee for Engine, though I had absolutely nothing to do with this project and only found out about it after it was done) looks at the nature of high tech jobs in the US today -- and it shows just how important innovation and tech jobs are to the economy. Even as we've gone through difficult economic times, high tech jobs have continually and significantly outpaced growth of the rest of the private sector: Perhaps more importantly, it shows that high tech jobs aren't just concentrated in a few key areas, like Silicon Valley, New York, Boston and Seattle -- but really are found pretty much all across the country: And, in fact, the presentation highlighted some unexpected areas of the country showing very large high tech growth in just the past few years: A lot of the places on that list above aren't areas that you'd consider to be "tech hubs." Now, of course, that last slide is just showing percentage growth, so if a place is starting from a small number, that growth percentage could be somewhat distorted. But when looking at the whole of the data, it certainly seems to suggest that high tech job growth is happening across the country -- and that's a good thing.

The problem, of course, is that it often seems like the high tech industry is ignored in Congress in favor of some other industries that have a much longer history of lobbying. But if the federal government is serious about claiming that job growth is the key to our economy, then it really needs to start paying attention to these facts, and recognize that the tech industry is not just limited to Silicon Valley, and is creating jobs across the country. That shouldn't be surprising of course, since we live in a digital age, and all sorts of jobs are quickly becoming tech jobs. But it does mean that we need policies in place that allow this kind of shift to continue happening, rather than stifling it with legacy policies that just protect old and obsolete businesses who fail to adapt.

If you'd like to play around with some of the data in an interactive format, the folks at Engine have set up a neat interactive map to dig into where the high tech jobs are located in the US today, even letting you look back at how it's changed over the past decade.

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Chamber Of Commerce Lies Again: Attributes Millions Of Jobs To IP Laws Based On Flimsy Correlation

Mike Masnick — Thu, 31 May 2012 10:53:00 PDT

Remember how we were just talking about Senator Chris Coons, and the fact that maybe (just maybe) he was realizing that pushing for ridiculously over-aggressive "anti-piracy" laws without understanding the details was a bad idea? Yeah, apparently that lesson didn't sink in very well. On Wednesday, Coons appeared at an event put on by the US Chamber of Commerce (the main lobbyists pushing for PIPA and SOPA), in which he called for new SOPA/PIPA-like laws and cheered on some ridiculously bogus "new research" from the US CoC claiming that "IP Creates Jobs for America."

The "research" uses the same bogus and debunked methodology that the US Chamber's "Global IP Center" has been championing for a while. First, you define what industries are considered "IP-intensive." You make this as broad as possible, so you include (for example) the tech industry (they get patents!), even though they're among the ones fighting to stop SOPA/PIPA-like laws, and also fighting to reform patent laws that have restricted innovation. Great. Then you list out all the jobs in those industries. And then you falsely claim that those are jobs that were "created by IP laws."

Except almost none of that is accurate. But it is a neat (though shameless) political scam to count those who are opposed to these kinds of laws and pretend they're in favor of them. Shame on Coons for falling for such blatant propaganda. Perhaps he should talk to his son, who explained to him why the bills he supported earlier this year would cause significant problems for the internet.

Meanwhile, as a part of this program, it appears that they're releasing totally misleading and laughable state-by-state profiles of how many "jobs" were "created" by IP. Here's California's (warning: pdf). It claims that IP supports 55% of the jobs in California's private sector -- and certainly suggests that those jobs wouldn't exist if we didn't have stronger IP laws (what with the big banner right above it declaring "IP Creates Jobs for California."

Yet the data shows no such thing. At no point do they even try to show a causal relationship between more draconian IP laws and more jobs. Because they know they can't. Instead, they use this bogus lumping together of any job that sorta kinda touches on IP laws and the massively ludicrous suggestion that those jobs only exist because of IP. I can understand why the Chamber of Commerce is promoting such a laughable study -- but it's a shame that a politician who claims to know better would fall for it.

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Want More Jobs? Get Rid Of The Patent Trolls

Mike Masnick — Mon, 21 May 2012 22:04:00 PDT

Last fall, after years and years of bickering and fighting, Congress and the President finally got together to pass what they called a "patent reform" bill. While the bill made a few changes to how the patent system works, it almost completely ignored the issue of patent trolling or just how destructive patents are to innovation. Even more ridiculous is that the President insisted that the new bill would create jobs. Perhaps for patent lawyers, but not for many others. Vivek Wadhwa has written up a great piece in the Washington Post noting that if we want job growth, we need to deal with the patent trolls, and most specifically the software patent trolls:

The President is mistaken—at least when it comes to the patent system as it relates to software patents. These patents—and the patent system—aren’t creating innovation, they are inhibiting it and, by extension, job creation. Why? Because the breakthroughs aren’t in the patents, they are in the way ideas are commercialized and marketed. Because of flaws in the patent system and government leaders’ misunderstandings, there is an arms race of sorts happening in the tech industry that is sapping billions out of the economy and crushing technology startups. This system is enriching patent trolls—companies that buy patents in order to extort money from innovators. These trolls are like a modern day mafia. Given this, I argue software patents need to be eliminated or curtailed.

Indeed. But we'll never fix the patent system if the government continues to think that patents themselves are the key to innovation, despite the evidence showing that patents simply don't correlate to actual innovation.

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How Disruption Works: Job Loss Isn't Really Job Loss

Mike Masnick — Fri, 6 Apr 2012 07:30:00 PDT

One of the key points in understanding how disruption works is to recognize that as old industries fail, new industries grow up to take their place. For a true free market to work, failure has to be not just accepted, but embraced. Tragically, in the crony capitalist system we have today, large incumbents go running to the government as soon as they're disrupted, whining about how the disruption is not the normal workings of disruptive innovation, but rather "the end of the world" and a sign of clear evil. It's why you hear talk of "too big to fail" and all sorts of efforts to paint new innovations as illegal, rather than just disruptive competition. Yet, as we've seen over time, disruptive innovation may move jobs around and cause certain sectors to diminish, but it tends to open just as many, if not more, opportunities elsewhere over time. I don't think I've ever seen that displayed quite as clearly in graphic form as in a chart that LinkedIn recently released, looking at what parts of the industry have been growing and which parts have been shrinking over the past few years: This chart caught the attention of Paul Smalera, who specifically noted that newspapers are at the very bottom, but online publishing is right near the top on the growth side -- a near perfect showing of how jobs shift over time. He notes the classic Innovator's Dilemma issue with news companies, where they thought they were in the business of selling newspapers, and that held back their ability to innovate:

They have been trapped in a terrible mindset that they are in the business of selling newspapers. The leap from paper to digital may be vast, but to newspaper publishers, it seemed like vaulting to a different business entirely, one they were loathe to get into. No matter what kind of lip service newspapers paid to the digital transformation, the most prominent paywall model out there, that of the New York Times, still protects print subscriptions with a tiered digital pricing strategy – one so annoying that it motivated its former digital design director to complain publicly about the entire signup process.

The lesson online media companies have taken from newspapers’ slow, public death is to move beyond the idea of selling the product. Online sites are selling their audience. It’s a simple twist of the equation, but one that changes everything about how a media company is run. A CEO who has realized that her audience – her customers – is the most important thing the company has will stop at nothing to give those customers what they want. Anything to make them feel as if they’re getting value from the company. And although she’ll monetize their aggregate value with advertisers and marketers, she’ll also protect them from underhanded sales pitches or confusing pricing strategies that infuriate the web-savvy.

This is a really good point on multiple levels. Beyond the innovator's dilemma (and the key point of figuring out what the real product is), Smalera is also debunking one of the popular myths of the internet era: when you're selling a user's attention, companies will naturally abuse their users. What he notes is that companies that do this don't end up lasting through the long haul, because users get annoyed and go elsewhere. Even though it's become a common pejorative statement among neo-luddites to mock the idea that the "users is the product," one thing that is true when that happens is that the companies need to treat their users right, or they have a crappy product that they can't sell.

Similarly, Mathew Ingram uses this to discuss why it's so difficult for legacy businesses to adapt, noting that it's difficult to change business models on the fly. Not only do you have to make big bets on new things, but you also have to keep the legacy business running while at the same time trying to undercut it with the new thing. It's why so many companies fail the innovator's dilemma test. Unless you have incredibly visionary leadership who can push a company through with a strong and clear vision of why the company must move in that direction, the magnetic appeal of trying to prop up increasingly obsolete businesses is just too strong.

But, the failure comes not because of some new "threat" or because of some kind of disgraceful activity (no matter how much legacy players try to describe it that way), but because corporate leadership chose to let others innovate, rather than supporting a plan of out-innovating themselves. Very, very few companies are willing to cannibalize their own business models -- but the failure to do that just means that someone else cannibalizes it for you.

And it goes way beyond news. The chart above shows some other key areas of disruption as well. That clump of retail, automotive, construction, banking, telecommunications, pharmaceuticals and real estate represents prime feeding ground for the next decade of disruption -- much of which has already started. You don't necessarily see the corresponding growth points on the opposite side of the chart, but as with newspapers and online publishing, give it a few years, and those new jobs and industries will make their way up the chart, as the legacy players continue to shrivel up (and whine all the way down).

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Should We Outlaw Employers From Asking For Social Networking Logins?

Mike Masnick — Thu, 22 Mar 2012 08:12:08 PDT

In 2009, we wrote about the city of Bozeman, Montana asking job applicants for all of their passwords to social networking sites, so that the city could look more closely to see if they had "high moral character." Public outrage over that plan resulted in the city dropping the requirement. Last year, we noted that some places in Maryland were doing the same, leading to a lawsuit. However, the Boston Globe is now reporting that more and more jobseekers are being asked for their social network logins, as a simplified "background check" by employers. It's a newspaper trend piece, so in typically maddening fashion it makes no effort to indicate how widespread this really is -- but the fact that it's not a big story any time an employer does this certainly suggests that it's becoming at least somewhat more standard.

Still, does that mean we should pass a law? Senator Richard Blumenthal -- who has long been in favor of laws against all kinds of internet companies -- is apparently working on exactly that kind of legislation. Somehow, I doubt it's an accident that the Boston Globe trend piece came out at about the same time as Blumenthal's plans were discussed. Frankly, I still think that it's pretty sketchy and questionable for companies to ask for logins, but is it so bad that we need a law? Is there at least some sort of data on how widespread this practice is?

In the meantime, for those interviewing for jobs who do get asked for such things, it seems only proper to respond as the first individual profiled in the original article does—by walking away:

Bassett, a New York City statistician, had just finished answering a few character questions when the interviewer turned to her computer to search for his Facebook page. But she couldn't see his private profile. She turned back and asked him to hand over his login information.

Bassett refused and withdrew his application, saying he didn't want to work for a company that would seek such personal information.

I would still guess this isn't quite as common as the article tries to suggest, but either way I'm curious if people feel this practice is so egregious that it needs a new federal law?

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If Politicians Pushing SOPA/PIPA Want To Create Jobs, They Should Support The Internet -- And Stop Treating Copyright Companies As Special

Glyn Moody — Fri, 3 Feb 2012 08:24:09 PST

A key element of the political rhetoric around SOPA/PIPA was the idea that it was about jobs, and that jobs are so critical in the current economic climate that safeguarding them overrides any other concern the Net world might have about the means being proposed to do that. But then the key question becomes: who are really more important in terms of those jobs - the copyright industries, or companies exploiting the potential of the Internet that would be harmed if the Net were hobbled by new legislation?

A timely new McKinsey report entitled "Internet matters: The Net's sweeping impact on growth, jobs, and prosperity" provides us with some independent evidence on the topic. Here are the relevant findings:

The Internet is a critical element of growth. Both our macroeconomic approach and our statistical approach show that, in the mature countries we studied, the Internet accounted for 10 percent of GDP growth over the past 15 years. And its influence is expanding. Over the past five years, the Internet’s contribution to GDP growth in these countries doubled to 21 percent.

The latest information (pdf) from the International Intellectual Property Alliance (IIPA) claims the GDP contribution from the "core copyright industries" in the US in the years 2007-2010 went from 6.43% to 6.36% - that is, its contribution to the overall GDP was largely unchanged over this period. So the contribution of the "core copyright industries" to GDP growth over this period was also around 6%. The "core copyright industries" are defined as follows: The core industries are those industries whose primary purpose is to create, produce, distribute or exhibit copyright materials. These industries include newspapers and periodicals, motion pictures, recorded music, radio and television broadcasting, and computer software.
That is, they include software companies, some of which are doubtless active on the Internet. So the contribution of the non-Internet core copyright industries to the GDP growth from 2007-2010 was less than the 6% figure above. That compares with an overall contribution of the Internet to GDP growth in the mature countries as a whole of 21% (but over five years, not four).

So what about the jobs? Here's McKinsey again:

The Internet is a powerful catalyst for job creation. Some jobs have been destroyed by the emergence of the Internet. However, a detailed analysis of the French economy showed that while the Internet has destroyed 500,000 jobs over the past 15 years, it has created 1.2 million others, a net addition of 700,000 jobs or 2.4 jobs created for every job destroyed. This conclusion is supported by McKinsey’s global SME survey, which found 2.6 jobs were created for every one destroyed.

Again, the IIPA report offers some figures: the core copyright industries employed 5,496,100 workers in 2007. These workers represented 3.99% of the total U.S. workforce in 2007. By 2010, the number of core copyright employees in the United States had declined by 398,500 workers to 5,097,600.
In an earlier report (pdf), the number of people employed by the core copyright industries in 2002 is given as 5.48 million – roughly the same as in 2007. That is, whether or not the numbers are really representative, there was a net decline in the workforce of the "core copyright industries", which include software and probably some Internet companies, from 2002 to 2010.

By contrast, in France, whose population is roughly a fifth of that of the US, the Internet created some 700,000 jobs net. That was from 1995, but in the early years it is likely that relatively few jobs were created by the then-new Internet, so most of those 700,000 would have been created later on - say 400,000 for the last eight years. In the US, we might expect at least a pro rata number – 2.4 million jobs. That's probably an underestimate, since the US is in the Net vanguard, but even if it's an overestimate, the figure is likely to be much better than the net loss of the core copyright industries.

If the backers of SOPA and PIPA were really as concerned about jobs as they profess to be, they would be doing everything in their power to defend the Internet so as to preserve this incredible engine of growth, not attack it. And they would be pushing the copyright industries to embrace the Internet as rapidly and completely as possible, since the McKinsey report also points out:

Although the Internet has resulted in significant value shifts between sectors in the global economy, our research demonstrates that all industries have benefited from the Web. Indeed, in McKinsey’s global SME survey, we found that 75 percent of the economic impact of the Internet arises from traditional companies that don’t define themselves as pure Internet players. The businesses that have seen the greatest value creation have benefits from innovation leading to higher productivity triggered by the Internet.

Sounds like a perfect solution: instead of fighting the digital revolution tooth and nail, the copyright industries could embrace it like everyone else, stop demanding to be treated like a special case, and start innovating.

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

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Movie Theaters' Top Lobbyist Resorts To Making Up Facts Concerning SOPA/PIPA

Mike Masnick — Tue, 24 Jan 2012 12:23:17 PST

Okay, the lies and ridiculous claims from SOPA/PIPA supporters just keep getting more and more ridiculous. On a panel at Sundance about the whole SOPA/PIPA issue, it appears that John Fithian, president/CEO of the National Association of Theatre Owners (NATO), was able to sound even more tone-deaf and out of touch than the MPAA's Chris Dodd! That's really saying something these days. Let's start with this:

NATO’s Fithian said he had never witnessed such a reversal in momentum considering the legislation’s passage seemed all but assured in October. "This was the most amazing turnaround of public opinion in the 25 years I’ve been a professional lobbyist. We were up there since Day One and took 25 of my [exhibitor] CEOs and met with 50 members of Congress. We asked each member of Congress if there was anything they need to make the legislation clear and nobody said anything. Google read the legislation at the same time and didn’t say a word. But in November the greatest backlash ever occurred."

First of all, Google had been complaining publicly about the bill since it was introduced in the Senate back in May. For Fithian to claim that the company had no complaints in October is simply laughable. As for questions from legislators, the fact that they didn't have any questions isn't a point in your favor, it's a sign of just how corrupt the system is. When Hollywood hands them a bill, they don't bother taking the time to understand it until after the public speaks out on it.

Fithian went on, "The backlash occurred, Google made its point, they’re big and tough and we get it. Hopefully now reasonable minds will prevail. Senator Dodd and his team are quite good at this. We’ll sit down with them and ask what has to be done to make legislation more narrowly tailored...."

And here's the sign that they really just don't get it. They still think that this was all Google. While Google did speak out publicly against the bill early, it had almost nothing to do with the protests that erupted last week, and only jumped on board very late in the game. You wouldn't believe how much complaining there was in various online communities about just how little Google was doing to fight this bill. The idea that this was driven by Google is laughable to anyone who was involved in these events. 14 million people spoke up about this bill. That wasn't Google. That was the wider internet. Pretending that this was Google flexing its muscles shows that this is someone who still isn't paying attention.

"But the reality is we have to stop these rogue websites. They’re stealing jobs from my members. It’s not Senator Dodd’s big wealthy studio executives, it's the 160,000 Americans who earn on average $11 an hour at my cinemas. Those are the jobs at stake.”

Almost nothing in this statement is true. As we discussed recently, employment at theaters has been dropping rapidly over the last decade. It peaked in 2003, but has steadily trended downward since then. Over that same time period, however, box office revenue has continue to rise at a pretty significant clip, setting new records almost every year until 2011, when it finally took a slight dip -- which many people attribute more to the crappy experience at theaters. You know why there might be a crappy experience? Because the theater owners that Fithian represents consolidated, built up giant, impersonal multiplexes, and then completely understaffed them.

Furthermore, $11/hour is hardly a living wage these days, and a large percentage of folks working at movie theaters aren't full time/lifetime employees, but high school kids looking to earn some extra beer money.

Either way, there is simply no evidence -- at all -- that "foreign rogue sites" have had any impact whatsoever on theater employment. As theater revenue continued to go up and up and up, theaters were firing more and more employees in an effort to cost-cut. Even the MPAA folks have repeatedly claimed that infringement has little to do with theater revenue and is almost entirely (in their minds) about in-home revenue (the same revenue stream the MPAA wanted to kill off 30 years ago in the Betamax case).

So it's difficult to see how anyone can take Fithian/NATO seriously. He claims that it was just Google. It was not. He references jobs in theaters, which have nothing to do with any of this. He claims that Google wasn't concerned about the bill. Is he saying anything that is backed up by fact? Well, perhaps the bit about our elected officials being too clueless/unconcerned to actually understand the bill that Hollywood handed them. That part is believable...

Amusingly, in another article about the same panel, it mentions that even Fithian's son was against him on this issue, and agreed with the anti-SOPA/PIPA folks. Also, it shows the real thinking on Fithian's part. It's not "piracy" he's concerned with, it's any form of competition whatsoever. Apparently during a discussion on the best way to compete with infringement, some people suggested the studios supplying "more content in new, affordable avenues to undercut the temptation to" infringe. Not only does that seem reasonable, but it's the only thing that's actually been proven (repeatedly) to work. But Fithian dismisses anything that would compete with theaters -- mocking both Netflix and Redbox as "bad business models." In other words, Fithian is making up anything he can... solely to act as protectionist as possible for a bunch of theater owners who don't want to adapt or compete. Perhaps he should take a lesson from the MPAA: being obstructionist against innovation is not a strategy for success.

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Harry Reid Says He's Concerned PIPA Will Break The Internet, But We Must Move Forward With It, Because Of 'Jobs'

Mike Masnick — Mon, 16 Jan 2012 08:41:44 PST

In a short appearance on Meet the Press on Sunday, Senate leader Harry Reid continued to insist that the Senate intended to move forward with PIPA, despite the widespread concerns, despite the White House's statement against the bill, and despite multiple Senators -- including bill co-sponsors -- asking him to hold off putting the bill to a vote. What's stunning is how misleading Senator Reid is being here. First, he claims that the bill is about "jobs," despite a total lack of evidence that that's true. In fact, as has been noted plenty of times here, the part of the economy that is creating jobs -- the startup/tech sector -- is the one who gets burdened by this bill. David Gregory then responds by pointing out that people keep pointing out to him online that this bill isn't really about jobs, and will harm the internet. Reid then tries to pretend that this is a new revelation. He notes that it was "reported out of the committee unanimously" back in May. That's true, but that was back before most people understood the bill, or the internet had spoken out. Even then, many of us were quite clear in speaking out about why this bill was a problem. But Harry Reid pretends that it's "just in the last few weeks" that anyone has raised concerns." That's flat out ridiculous.

Next he claims that he's working with Senator Feinstein on this, since she's "in the middle" of the issue, representing both Northern and Southern California, where the issue is loudest. This would be the same Senator Feinstein who is so tone deaf to what's happening in her own state, that just weeks ago she insisted that she didn't know the tech industry was upset about the bill.

But the really stunning part? After these bizarre claims, he says, of those who have complained about the bill:

"I think they're right. I think it could create some problems. That's why I've spoken Senator Leahy, the Chairman of the Committee. I've written a letter to the ranking member Senator Grassley, saying that some issues have come up. I think this needs to be a winner for everyone -- not just for the content people.... so we need to work on this."

But then he still insists that they're going forward with the bill! He notes that he's expecting a "manager's amendment" from Leahy -- but Leahy has already said that the manager's amendment is just going to delay the implementation of the DNS issues. If Senator Reid really wants to make sure the bill is a "winner for everyone" then shouldn't we take some time to make sure that everyone's happy? It's doubly concerning that he appears to think these issues "just came up" in the past few weeks. That shows that he's totally and completely out of touch on the many months that people were speaking out against the problems of this bill. If anything that's even more reason to delay things, since Reid himself is admitting he's totally ignorant of the many, many, many problems that people have been discussing for months now.

It's such a politician's response: he pretends that he's in agreement with the concerns of everyone... but then immediately admits he's ignoring those concerns and pushing forward with a bad bill, which he clearly never understood, and which it appears he just found out there was criticism around, despite the fact it's been going on for months. Everything in this statement points to reasons not to vote on the bill on the 24th, and yet he wants to move forward with it. It's just stunning.

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Apparently, Someone Forgot To Tell Reality That The Entertainment Industry Was Dying

Mike Masnick — Wed, 11 Jan 2012 09:46:41 PST

We hear it all the time: the entertainment industry legacy players insist that the world is ending, jobs are going away, and that they need new laws like SOPA and PIPA or it's all over. That's why SOPA & PIPA are being positioned as jobs bills. Especially popular are the major labels and the big Hollywood studios insisting that they're really doing this not to save their own companies from having to adapt, but to protect the poor, poor indie creator, who is totally being destroyed by those evil online pirates. We hear time and time again about how it's really the "indie" folks who are being decimated.

Funny thing: reality says otherwise.

The Bureau of Labor Statistics (BLS) has some pretty nice tools and a neat table of jobs in various industry sectors in 1998, 2008 and then projected in 2018. Let's take a look at the entertainment industry, shall we? Why yes, that does show that the industry grew nicely from 1998 to 2008... all the while we were being told it was being decimated by piracy and no one could find work any more. Oh, and check out that last line. Independent artists, writers and performers jumped from 35.2k in 1998 to 50.4k in 2008 -- the first decade of real mainstream internet infringement (Napster arrived in '99). If you're not quick with the percentages, that's a pretty astounding 43.2% growth rate. And, it appears the BLS continues to think that jobs in that sector are going to grow over the next decade as well. Damn those pesky facts.

Of course, for those of us who have been following/reporting on this for pretty much all of that time, this isn't surprising at all. What we've seen is an explosion in opportunities for independent artists. Before all of this happened, it was much more difficult to be an indie artist, because the major labels and studios really were the gatekeepers. It was almost impossible to succeed without them. These days, however, it's become a choice, and there are so many ways to succeed that don't require the majors. It's no wonder that many more people are making a living as an indie artist than ever before.

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Is America Losing Its Startup Edge?

Mike Masnick — Tue, 10 Jan 2012 14:02:51 PST

We've talked, in the past, about the paradox of job creation by the government. Too often the government acts as if "job creation" is about propping up or subsidizing big companies, hoping that they'll hire lots of people. And, intuitively, you can see the appeal there for two reasons. First, it's much easier to think that Giant Telco A will likely hire another 5,000 workers to dig ditches if the government gives them a bunch of money, than it is to think that random startup A will hire 5,000 people. Second, often the disruptive innovations that actually do create economic growth and jobs comes at the expense of legacy companies in older industries. And the fear there is always job losses. So, some new startup comes along with a technology that makes life more efficient and makes stodgy old legacy company obsolete... and upfront you're going to see job cuts at the legacy company, even if the end result is many more jobs (and greater economic efficiency).

But the truth is that if the government wants to really create new jobs, it needs to support the startup ecosystem. Research from the National Bureau of Economic Research (NBER) and the US Census Bureau last year found that startups really are the key to both gross and net job growth. So if the government really wants to encourage economic growth and new jobs it should be focused on making sure the startup ecosystem is strong and vibrant. Unfortunately, that doesn't appear to be the case. When we see proposals like SOPA, which will hinder startups by placing tremendous liability on them and scaring off investors, we get worried.

Already, the situation isn't great. While the US certainly has the reputation for being friendly to startups, Aaron DeOliveira, points us to a report that shows that the US is actually 23rd on a list of startups per working-age population within countries that are members of the OECD. Even France is ahead of us.

This does not bode well for the US economy or for job growth. For innovation to thrive, we need the creative destruction and economic and job growth brought about by startups and entrepreneurs. We don't get that when the government is "captured" by the large legacy players who are only focused on "protecting" and defending their turf, rather than fostering innovation, growing the economy and creating jobs.

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Cato Institute Digs Into MPAA's Own Research To Show That SOPA Wouldn't Save A Single Net Job

Mike Masnick — Wed, 4 Jan 2012 11:04:00 PST

One of the things we've noticed in the debate over SOPA and PIPA is just how the other side is really lying with statistics. We've done a thorough debunking of the stats used by the US Chamber of Commerce to support both bills, as well as highlighted the misleading-to-bogus stats used by Lamar Smith in his support of the bill.

But every day, more bogus stats are rolled out. Julian Sanchez, over at the Cato Institute, has decided to dig into one specific bogus number, the supposed claim of $58 billion in "losses," and to show how the numbers don't hold up to any scrutiny. In fact, using the details of where the numbers came from, Sanchez makes the case that SOPA won't save a single net job for the US economy. Read on to find out how.

First off, the $58 billion comes from an absolutely laughable report for the Institute for Policy Innovation, done every year by Stephen Siwek at a firm called Economists Incorporated. We've challenged this ridiculous number in the past, but not to the level of detail that Sanchez has here. He starts out by bringing up (as we have many times), Tim Lee's excellent debunking of the ridiculous "ripple effects" that Siwek/IPI always use, despite them being a trick to double, triple, quadruple, etc count the same dollars:

In IPI-land, when a movie studio makes $10 selling a DVD to a Canadian, and then gives $7 to the company that manufactured the DVD and $2 to the guy who shipped it to Canada, society has benefitted by $10+$7+$2=$19. Yet some simple math shows that this is nonsense: the studio is $1 richer, the trucker is $2, and the manufacturer is $7. Shockingly enough, that adds up to $10. What each participant cares about is his profits, not his revenues.

It turns out that the $58 billion comes from this process, making use of a dubious multiplier on a different MPAA report that claimed merely $6.1 billion in losses for the US movie industry, multiplied to about $20 billion -- as the portion of the "losses" that come from movies. But, as Sanchez notes, that number itself is highly questionable:

That original $6.1 billion figure, by the way, was produced by a study commissioned from LEK Consulting by the Motion Picture Association of America. Since even the GAO was unable to get at the underlying research or evaluate its methodology, it’s impossible to know how reliable that figure is, but given that MPAA has already had to admit significant errors in the numbers LEK generated, I’d take it with a grain of salt.

Okay, but even if we assume that $6.1 billion is accurate, Sanchez explains how that's not even what's at stake with SOPA, since the $6.1 billion is a global number:

Believe it or not, though, it’s actually even worse than that. SOPA, recall, does not actually shut down foreign sites. It only requires (ineffective) blocking of foreign “rogue sites” for U.S. Internet users. It doesn’t do anything to prevent users in (say) China from downloading illicit content on a Chinese site. If we’re interested in the magnitude of the piracy harm that SOPA is aimed at addressing, then, the only relevant number is the loss attributable specifically to Internet piracy by U.S. users.

Again, we don’t have the full LEK study, but one of Siwek’s early papers does conveniently reproduce some of LEK’s PowerPoint slides, which attempt to break the data down a bit. Of the total $6.1 billion in annual losses LEK estimated to MPAA studios, the amount attributable to online piracy by users in the United States was $446 million--which, by coincidence, is roughly the amount grossed globally by Alvin and the Chipmunks: The Squeakquel.

Okay. So now we're down from $58 billion to... $446 million. That's less than 1% of the original number. But, still, you might say, $446 million is a fair chunk of change (and the $58 billion doesn't just include movies, but other content, like music and software). So perhaps something like SOPA still makes sense to protect a few jobs? Nope. Again, Sanchez points out how this ignores reality:

As one expert consulted by GAO put it, “effects of piracy within the United States are mainly redistributions within the economy for other purposes and that they should not be considered as a loss to the overall economy.” In many cases--I’ve seen research suggesting it’s about 80 percent for music--a U.S. consumer would not have otherwise purchased an illicitly downloaded song or movie if piracy were not an option. Here, the result is actually pure consumer surplus: The downloader enjoys the benefit, and the producer loses nothing. In the other 20 percent of cases, the result is a loss to the content industry, but not a let loss to the economy, since the money just ends up being spent elsewhere. If you’re concerned about the overall jobs picture, as opposed to the fortunes of a specific industry, there is no good reason to think eliminating piracy by U.S. users would yield any jobs on net, though it might help boost employment in copyright-intensive sectors.

In other words, we're right back where we started. The whole thing is based on the bogus assumption that money not spent on movies (which, again, have been making a ton of money lately) somehow disappears from the economy. But that's simply not true. So, really, why is it that anyone in the press, or in elected office, is allowed to quote that bogus $58 billion number without it being challenged?

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Actually, Jobs In Making Movies Are On The Rise, Not Falling

Mike Masnick — Wed, 14 Dec 2011 14:30:00 PST

One of the key talking points that the movie industry likes to bring up concerning the reason it wants SOPA and PROTECT IP is that it has to "protect jobs." In a recent talk by the MPAA's Chris Dodd, he once again talked up how many jobs were being "lost" in the movie industry. First, he pulled out the industry's favorite 2.2 million number, which is clearly bogus. As we noted earlier in the week, new research from the Congressional Research Service shows that the movie industry actually employs 374,000, making the claim (pulled from the highly questionable Institute for Policy Innovation) that the industry is losing 373,000 jobs each year... kinda questionable.

But I wanted to get a better understanding of what was actually happening to jobs in and around the motion picture industry. Seeing as CEOs of the major studios continue to bring in record salaries, it certainly sounds like the industry isn't doing that bad. Thankfully, research firm IBISWorld digs pretty deep into different industries to separate out what's happening. After digging through the numbers, it looks like the MPAA is (yet again) being intellectually dishonest.

If you look at the jobs in actual movie production -- the kind that they always imply are most at risk -- it turns out those jobs are growing rapidly. In 2002, there were about 43,000 people employed in the actual production of movies and videos. In 2010? That number had jumped to 77,000. Not bad. So where are the few job losses coming from? Well, there are about 1,500 fewer jobs in "movie and video distribution," but that makes sense, since technology is making that area less important. Really, the only place in the industry that has seen a significant loss in jobs (and even then it's not that big) is in the movie theater business. Employment in movie theaters dropped from about 134,000 in 2002 to about 119,000 in 2010. That accounts almost entirely for the drop in total employment in the movie business from 392,000 down to 374,000 that the CRS report noted.

In other words, the only "significant" job losses that we can spot are coming from the theaters themselves -- and it's difficult to see how that's got much, if anything, to do with piracy. As was noted in the CRS report, box office revenue has continued to hit records every year. So, really, it looks like theaters may just be cutting staff to cut costs, but that revenue at the box office keeps getting higher. So, more money with fewer staff. That's not exactly a story that shows an industry decimated by piracy.

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Luddite Redux: Don't Kill The Robots Just Because They Replace Some Jobs

Andrew Fong — Tue, 29 Nov 2011 20:02:00 PST

Here are a couple points to ponder:

Fun fact #1: California prison guards are expensive.

Fun fact #2: South Korea's getting robot prison guards.

I'm sure the prisoners welcome their new robot overlords, but I bet the prison guards union doesn't. Or any other union for that matter. And they're not alone. Over the past few weeks, tech industry commentators spent slightly more time than usual wringing their hands over whether technology was killing jobs. I think this video captures the debate pretty well. It might sound paradoxical, but this replacement of humans by machines is actually a good reason to limit secondary liability for the robotics industry. And I'm not just referring to secondary liability in the copyright sense, but to any liability incurred by robot manufacturers because of how others use their robots.

This isn't a theoretical issue. Automation and efficiency have always threatened certain jobs and industries -- and one of the standard reactions is to somehow blame the technology itself and seek to hinder it, quite frequently by over-regulation. Of course, the extreme version of this is where the term "luddite" came from -- an organized effort to attack more efficient technology. Of course, that resulted in violence against the machines. More typical were overly burdensome regulations, such as "red flag laws," that said automobiles could only be driven if someone walked in front of them waving a red flag to "warn people" of the coming automobile. Supporters of this law, like supporters of secondary liability laws for robots, can and will claim that there are "legitimate safety reasons" for such laws and that the impact on holding back the innovation and extending the lifetime of obsolete jobs is just a mere side benefit. But like those red flag laws, applying secondary liability to robotics would significantly hinder a key area of economic growth.

Techdirt has covered the question of a secondary liablity safe harbor for robots before, and Ryan Calo's written a great paper about the legal issues coming out of the robotics arena, but an even more important (and specific) point is exactly why these safe harbors matter for job creation -- even as some continue to argue the other way (that such safe harbors will destroy jobs).

Technology has been replacing human labor since humans invented, well, technology. But while technology may get rid of inefficient jobs, it eventually creates replacements. To cite one commonly-used example, the switched telephone network put operators out of a job, but it created plentiful new jobs for telemarketers (and other businesses that relied upon the packet-switched phone network... including everything built on and around the internet today). The problem is that while it was obvious how many operators would be out of a job, it wasn't immediately clear how lucrative (or annoying) telemarketing could be, let alone the eventual transformation of the phone lines into a vast global information sharing network, and the hundreds of millions of new jobs created because of it.

Erik Brynjolfsson and Andrew McAfee examine this problem in detail in their book, which I recommend. But much of it boils down to this. Technology creates jobs, yet it's not obvious where the new jobs are, so we need bold, persistent experimentation to find them:

Parallel experimentation by millions of entrepreneurs is the best and fastest way to do that. As Thomas Edison once said when trying to find the right combination of materials for a working lightbulb: "I have not failed. I've just found 10,000 ways that won't work." Multiply that by 10 million entrepreneurs and you can begin to see the scale of the economy's innovation potential.

This is especially important for robotics. It's obvious how robots make certain jobs obsolete -- e.g. driverless cars don't need drivers -- but it's less clear what new job opportunities they open up. We need to try different things.

Unfortunately, secondary liability creates problems for robot manufacturers who open up their products for experimentation. Ryan Calo explains this in more detail, but the basic problem is that, unlike computers, robots can easily cause physical harm. And under product liability law in most states, when there's physical harm to person or property, everyone involved in the manufacturing and distribution of that product is legally liable.

Ideally, we'd want something like a robot app store. But robot manufacturers would be unwilling to embrace commercial distribution of third-party apps if it increased their chances of being sued. There's evidence that Section 230's safe harbors (and, to some extent, the DMCA's safe harbors) play a key role in facilitating third-party content on the web. Absent a similar provision for robots, manufacturers are more likely to limit their liability by sticking to single-purpose robots or simply locking down key systems. That's fine, if we know exactly what we want our robots to do -- e.g. replace workers. But if we want robots to create jobs, it'd help to limit secondary liability for the robotics industry, open things up, and let widespread experiments happen freely.

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The Definitive Post On Why SOPA And Protect IP Are Bad, Bad Ideas

Mike Masnick — Tue, 22 Nov 2011 11:55:59 PST

There's been plenty of talk (and a ton of posts here on Techdirt) discussing both SOPA (originally E-PARASITE) and PROTECT IP (aka PIPA), but it seemed like it would be useful to create a single, "definitive" post to highlight why both of these bills are extremely problematic and won't do much (if anything) to deal with the issues they're supposed to deal with, but will have massive unintended consequences. I also think it's important to highlight how PIPA is almost as bad as SOPA. Tragically, because SOPA was so bad, some in the entertainment industry have seen it as an opportunity to present PIPA as a "compromise." It is not. Both bills have tremendous problems, and they start with the fact that neither bill will help deal with the actual issues being raised.

That main issue, we're told over and over again, is "piracy" and specifically "rogue" websites. And, let's be clear: infringement is a problem. But the question is what kind of problem is it? Much of the evidence suggests that it's not an enforcement problem and it's not a legal problem. Decades of evidence from around the globe all show the same thing: making copyright law or enforcement stricter does not work. It does not decrease infringement at all -- and, quite frequently, leads to more infringement. That's because the reason that there's infringement in the first place is that consumers are being under-served. Historically, infringement has never been about "free," but about indicating where the business models have not kept up with the technology.

Thus, the real issue is that this is a business model problem. As we've seen over and over and over again, those who embrace what the internet enables, have found themselves to be much better off than they were before. They're able to build up larger fanbases, and to rely on various new platforms and services to make more money.

And, as we've seen with near perfect consistency, the best way, by far, to decrease infringement is to offer awesome new services that are convenient and useful. This doesn't mean just offering any old service -- and it certainly doesn't mean trying to limit what users can do with those services. And, most importantly, it doesn't mean treating consumers like they were criminals and "pirates." It means constantly improving the consumer experience. When that consumer experience is great, then people switch in droves. You can, absolutely, compete with free, and many do so. If more were able to without restriction, infringement would decrease. If you look at the two largest contributors to holding back "piracy" lately, it's been Netflix and Spotify. Those two services alone have been orders of magnitude more successful in decreasing infringement than any new copyright law. Because they compete by being more convenient and a better experience than infringement.

Finally, even if you disagree with all of that, and believe that the problem is enforcement, SOPA and PIPA, won't be effective in dealing with that. The internet always has a way of routing around "damage" no matter how hard people try to stop it, and the approach put forth by these bills is a joke. It's hard to find anyone with technology skills who thinks that they will be effective. Every "blockade" has an easy path around it, and the supposed "anti-circumvention" rule in SOPA will never deal with the more obvious paths around things like DNS blocking (use a different DNS or a perfectly legal foreign VPN system). The private right of action efforts are also mistargeted. They're based on the premise that infringement is done for monetary reasons. It's amusing that just a few years ago, these same industries insisted that music and movie fans never wanted to pay anything any more, but now they're claiming that these same people are paying for cyberlockers all the time? That's simply not credible. And if there's so much money to be made, the studios and labels would be opening their own cyberlockers. Either way, we've watched this game of Whac-a-mole for over a decade. It doesn't work. Every site that is shut down leads to half a dozen new ones that spring up. This is not how you tackle a problem: by making the same mistake made over and over again in the past.

So... SOPA & PIPA don't attack the real problem, do nothing to build up the services that do solve the problem, and won't work from a technological standpoint. And that's just if we look at the what these bills are supposed to do.

The real fear is the massive collateral damage these bills will have to jobs, the economy and innovation.

The broad definitions in the bill create tremendous uncertainty for nearly every site online. This sounds like hyperbole, but it is not. Defenders of the bill like to claim that it is "narrowly focused" on foreign rogue infringing sites. Nothing could be further from the truth. While PIPA targets only foreign sites, the mechanism by which it does so is to put tremendous compliance and liability on third party service providers in the US. SOPA goes even further in expanding the private right of action to domestic sites as well. We've already seen how such laws can be abused by looking at how frequently false takedown claims are made under the existing DMCA. Of course, under the DMCA, just the content is blocked. Under SOPA all money to a site can be cut off. Under PIPA sites will just end up in court. Or, with both laws, an Attorney General can take action leading US companies to have to effectively act as network nannies trying to keep infringement from being accessible. None of this is good for anyone building a startup company these days. The massive uncertainty around this, combined with the need for a huge legal department sitting in "the garage" as a startup begins, will certainly slow down the pace of innovation in the US, while likely driving it elsewhere.

And the definitions are ridiculously broad. Under SOPA, you can be found "dedicated to the theft of US property" if the core functionality of your site "enables or facilitates" infringement. The core functionality of nearly every internet website that involves user generated content enables and facilitates infringement. The entire internet itself enables or facilitates infringement. Email enables or facilitates infringement. They have significant non-infringing uses as well, but the definition leaves that out entirely. Under SOPA, there's also a risk if you take "deliberate actions to avoid confirming a high probability" of infringement on a site. Of course, it's not at all clear how one takes deliberate actions to avoid taking action. The only way to read this clause from a tech company perspective is that it requires proactive monitoring, which is effectively impossible for a user generated content site. PROTECT IP's definitions are equally broad, again using the "enabling" or "facilitating" language.

The risk of these broad definitions on perfectly legitimate companies is not theoretical: Defenders of both bills continue to insist that they're only meant to deal with the worst of the worst. If that were really true, the definitions would be a lot tighter and a lot more specific. Even if this is the intention of the authors of both bills, the simple fact is that the very broad definitions in the bill, mean that any entrepreneur today will need to take significant compliance costs just to avoid the possible appearance of fitting the criteria.

Defenders also like to brush off the idea that a bill like this would target something like YouTube. But we know that's not accurate since Viacom is still engaged in a huge lawsuit against YouTube, in which Viacom's claims certainly appear to cover the definitions found in these bills. While it seems unlikely that anyone would try to shut down YouTube completely, given the public outcry it would create, the real fear is what happens to the next YouTube, or just the fear that a rights holder could strike into any company by threatening them under the private rights of action in each bill. It becomes a form of legalized extortion. Threaten to bring action under these bills, and watch tech companies crumble.

And, already there are indications that companies are interested in bringing broad actions for infringement against organizations that most people would consider perfectly legal. Advertising giant GroupM recently asked its entertainment industry customers to compile a list of "sites dedicated to infringement," not unlike what's found under PROTECT IP. Universal Music, Warner Bros. and Paramount were three key providers to that list, which ended up covering a large number of perfectly legitimate sites including the famed Internet Archive (widely recognized as the library for the internet). It also included numerous innovative startups that are frequently used by content creators to get their works out, such as SoundCloud and Vimeo. Even more worrisome, it included a variety of publications and blogs, including Vibe Magazine, the quintessential hip hop and R&B magazine founded by Quincy Jones, as well as Complex, a popular lifestyle magazine recently recognized as one of the most valuable startups in New York.

Even worse, it appears that Universal Music also included the personal website of one of its own top artists, 50Cent. The hiphop star has a personal website as well as a website owned by Universal Music. The personal website is much more popular... and it appeared on the infringement list. Suddenly, you can see how letting companies declare what sites are dedicated to infringement can lead to them looking to stifle speech and competition.

Similarly, Monster Cable, who has stated its support for PROTECT IP, has put together its own list of "rogue sites" and it, rather stunningly, includes sites like eBay, Craigslist, Costco and Sears. It even includes consumer rights groups like Which? in the UK, and various popular shopping search engines like PriceGrabber.

These companies clearly take an expansive view of what constitutes "dedicated to infringement," and have no problem suggesting they would like to stop these sites. Internet companies and site owners have every right to be extremely afraid of what laws like PIPA and SOPA would do when they give much more power to these private companies to take actions that could shut down these sites, tie them up in court or merely cut off their funding and advertising.
That uncertainty has very real and quantifiable effects on jobs in this country. President Obama has noted that the internet adds approximately $2 trillion to the annual GDP (pdf). The amount of jobs created by the tech industry are massive, and represent a large percentage of all new job creation today. IDC has predicted 7.1 million new jobs and 100,000 new businesses created in the next four years from the tech sector. An astounding 3.1 million people are employed thanks to internet advertising -- jobs that simply did not exist a decade ago.

And these jobs go way beyond just the jobs at tech companies themselves. The important thing in tech platforms is not in how many jobs are at those companies, but how many jobs they enable elsewhere. eBay has been said to have empowered 750,000 people to build their own small businesses. Facebook's app platform has, by itself, created somewhere around 200,000 new jobs (pdf). It's likely that Apple's iOS app platform has created significantly more than that, given how popular it is. Google's tools have been shown to create $64 billion (with a b) in additional economic activity.

Do we really want to stifle all of that growth and activity with regulations that will stifle innovation and jobs, even (as noted above) as the evidence shows that merely adapting and providing a better service makes everyone better off?

That uncertainty has extreme and quantifiable effects on investment in new startups. A very detailed look at the uncertainty in the cloud computing space, prior to and after the decision in the Comedy Central v. Cablevision case, which effectively set the framework for the legality of cloud computing, showed much greater investment when the law was clarified to be in favor of letting these new services thrive. Take that away, and investment in this engine of growth likely would be much lower. Considering that politicians claim to be so concerned about the economy and jobs these days, the idea that they would push forth a bill that quantifiably would reduce investment in one of the only sectors creating new jobs is really stunning.

Broadly expanding secondary liability is a dream for trial lawyers, but will be a disaster for business. There's been a move, associated with these bills to somehow demonize important concepts of safe harbors from secondary liability. The suggestion is that secondary liability somehow "allows" bad activity. Nothing is further from the truth. Illegal activity is still illegal. The point of safe harbors from secondary liability is blaming the party actually doing the action that breaks the law. We don't allow people to sue AT&T because the telephone was used in commission of a crime and we don't sue Ford because someone crashed their pickup truck into another car. Liability should be properly applied to the parties doing the action that breaks the law. The safe harbors have just made that clear -- and allowed innovation to flourish. Empirical studies have pointed out that "the rich informational ecosystem we know today... is a function of the 'breathing space' Internet intermediaries currently have under the law."

Other studies have shown that pulling back on such secondary liability safe harbors would mean that investors would need an astounding 13x to 20x return on investment to make the risk worthwhile. That triples or quadruples the standard risk level that most angel investors deal with.

The key way that both PIPA and SOPA function are to drastically scale back that breathing space, by attaching secondary liability and compliance costs to US companies, in an attempt to keep users from infringing via other sites. That would represent a massive shift in the legal framework that has allowed the internet to flourish, and yet no research or studies have been done to look at the possible impact of all of this.

The technical measures described in both bills is tremendously problematic. Looking to use DNS blocking is just a bad move. It's why a group of core internet infrastructure experts spoke out very early on (about COICA, in the pre-PIPA days) to explain how DNS blocking would set back a decade or more's worth of work on online security standards, would make people less safe online, and has the risk of fragmenting the internet. It's why the founder of the world's largest independent DNS provider, OpenDNS, in charge of protecting one-third of all schools in the US, has noted that under these laws, he likely wouldn't have started the company, or might have started it in another country.

Having a judge determine the best network architecture is a bad idea. SOPA's attempt to address the "DNS blocking doesn't work" argument by adding a vague standard in which courts can order sites to take "reasonable measures" to block even more is also not encouraging. Does anyone really think that we want some judges determining what are "reasonable measures" for managing how the internet works? Wouldn't it be better to trust the long line of experts, drop any thought of DNS blocking, and move on?

Going down the slippery slope of censorship is fraught with peril, both domestically and abroad. Supporters of the law get angry any time people bring up censorship, but as law professor Derek Bambauer has made clear, any effort to block content is a form of censorship. What we can argue is whether or not this form of censorship makes sense or is a policy that people think makes sense. But no one should deny that bills that lead to blocking access to websites is a form of censorship.

There is reasonable debate as to whether or not this level of censorship goes violates the First Amendment. Constitutional scholar Laurence Tribe has argued that it does violate the First Amendment. Well over 100 of the country's top legal scholars have made the same argument. Arguing on the other side is well respected First Amendment lawyer Floyd Abrams... but even he admits that under SOPA and PIPA protected speech would get censored. He just deems that as acceptable collateral damage, as being merely "incidental." We can argue over whether or not it really is incidental, as we've already seen actions against sites under current law that seek to stifle large amounts of protected speech outside of any infringement.

The functional setup of such site blocking -- via DNS blocking -- is effectively identical to how the Great Firewall of China works. While the intended purpose is obviously different, the actual mechanism for blocking is nearly identical. This creates significant cover for repressive regimes to resist any diplomatic efforts by the US to push back against attempts by the US to promote internet freedom. Furthermore, we have seen how countries, such as Russia, have used copyright law to censor political opposition, using the law to go against activists challenging the government. Even if the intended purpose of SOPA and PIPA are to protect against infringement, opening up the door to censorship for one purpose makes it nearly impossible to avoid it being used for other purposes. It also basically gives the perfect blueprint for repressive regimes. They merely need to claim that their Great Firewalls are designed to stomp out infringement, and then can use it to intimidate and block political opponents. Adding to that is the massive expansion of the diplomatic corp. pushing for greater enforcement, and it's almost as if we're begging countries to set up their own Great Firewalls that will certainly be abused.
Countries abroad are watching us, and already noting the seeming hypocrisy concerning our statements. Media in other countries, who already are known for suppressing speech and censoring the internet, are already mocking the US for even considering such legislation at the same time as the US State Department claims to be promoting internet freedom. Talking about the importance of internet freedom on the one hand, while pushing countries to put in place the very tools that will be used to undermine internet freedom is not a particularly consistent message. This can be seen in VP Joe Biden's recent speech on internet freedom that presents all the arguments for why SOPA and PIPA should not be supported (in an unintended manner).
Changing what counts as a felony for copyright, without understanding the implications or common usage of technology puts many at risk. This does not apply directly to PIPA, but its companion legislation in the Senate, S.978. Similar provisions are found in SOPA as well, making certain forms of "streaming" a felony. Supporters of these actions insist that they're merely harmonizing criminal and civil copyright laws, since the felony parts of the criminal copyright statute cover reproduction and distribution, but not performance. What they fail to recognize (or admit) is that there's a reason why performance rights were left out, and it's because it's pretty ridiculous to think of a felony performance in normal contexts. But it becomes even more troublesome in the online context, because "performance" is so vaguely defined in an era when streaming works via a simple one-line embed. To embed a video is no different -- from a technical standpoint -- from linking to a video. And most people would have significant problems with the idea that you could face five years in jail for merely linking to content you have no control over. Yet, the streaming portions of SOPA and of S.978 make that entirely possible. Merely putting a single line of code on a site, pointing to content on another server that you have no control over, potentially makes you a felon. This will have massive unintended consequences and puts at risk millions of Americans who embed videos all the time.

To be honest, there are many, many more problems hidden down within the specifics of the bill, but this post was already getting long enough. However, what we have is a bill that doesn't tackle the real problems at all, that won't solve the problem it thinks it's facing, and has massive unintended consequences. Why? Well, because the entertainment industry insists that it's in trouble. This is the same entertainment industry who has been claiming the same thing about every technological innovation ever. If they'd had their way in the past, there would be no radio, no cable TV, no VCR, no TiVo and no iPods. Do we really trust them now to create a "narrowly focused" law that will only target the really bad behaviors? We'll close it out with a few quotes from the entertainment industry over the last century discussing various technological innovations, and question why we're letting them drive PIPA and SOPA forward:

The Player Piano

“I foresee a marked deterioration in American Music…and a host of other injuries to music in its artistic manifestations by virtue – or rather by vice – of the multiplication of the various music reproducing machines” -- John Philips Sousa, 1906

The Video Cassette Recorder

"But now we are faced with a new and troubling assault on our fiscal security, on our very economic life, and we are facing it from a thing called the Video Cassette Recorder" -- MPAA President Jack Valenti in 1982

Cassette Tapes

"When the manufacturers hand the public a license to record at home...not only will the songwriter tie a noose around his neck, not only will there be no more records to tape, but the innocent public will be made accessory to the destruction of four industries" -- ASCAP, 1982

Digital Audio Tape

The Mp3 Player

“Diamond's product Rio was destined to undermine the creation of a legitimate digital distribution marketplace..." -- RIAA President Hillary Rosen in 1998

The Digital Video Recorder

"It's theft...Any time you skip a commercial or watch the button you're actually stealing the programming." Turner Broadcasting CEO Jaime Kellner in 2002

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Senators Rand Paul, Jerry Moran And Maria Cantwell All Warn That PROTECT IP Will Kill Jobs

Mike Masnick — Thu, 17 Nov 2011 16:05:47 PST

Quite an interesting day. Having Rep. Nancy Pelosi come out against SOPA was quite something. But the Senate has still been pretty quiet. However, it appears that some Senators saw the public outcry against online censorship, against regulating internet companies, against changing the basic regulatory and technological framework that the internet has been built on... and realized that perhaps they shouldn't stay quiet any longer either. Senator Wyden, of course, has been vocal about his opposition to PROTECT IP (and has put a hold on the bill), but now Senators Rand Paul, Jerry Moran and Maria Cantwell have also come out with a statement against PROTECT IP, saying that they, too, will put a hold on PROTECT IP.

Our fear, which is shared by many, is that S. 968 as currently written will have the unintended consequences of undermining our nation's national security and our goals to encourage innovation, entrepreneurship, and job creation.

As currently written, the Protect IP Act and the companion Stop Online Piracy Act legislation in the House unnecessarily risk an overbroad application of the new and unprecedented tools they provide to the U.S. Department of Justice and the private sector. An excessively expansionary application of these tools would undermine our national security and economic interests.

We are particularly concerned that the proposal authorizes the use of remedies that will undermine the infrastructure of the Internet. The nation's leading technologists and security experts say these provisions will kill our best hope for actually making the Internet more secure against cyber attacks. We take seriously the alarm expressed by the nation's leading investors in new online startups who say the proposal will dampen interest in financing the new ideas and businesses of tomorrow, and to legal and human rights experts who caution that the proposal enables the silencing of speech.

With significant concerns from both parties in both Houses of Congress, will supporters of these bills still try to push them forward as is? Will they finally let the tech industry into the discussions? Or will they continue to make ridiculous claims about how this effort to regulate the internet is to "protect the troops"?

Unfortunately, the biggest lobbyists in favor of these bills -- the MPAA and the US Chamber of Commerce, mainly -- are working over time to get them to move forward. They're telling Senators and House members that yesterday's protests, which inundated Congress with calls and letters against SOPA/PIPA were "just a fluke." We know that's not the case, but it would be nice if Congress heard that as well.

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Viacom: Pass SOPA Or Spongebob Dies

Mike Masnick — Tue, 15 Nov 2011 09:42:43 PST

It's the most unintentionally hilarious video of the year... Viacom has put out one of the most ridiculous "anti-piracy" propaganda videos yet, complete with debunked stats, ridiculous claims, ominous music... and lots and lots of Viacom employees admitting that they're too clueless to adapt to a changing marketplace, and begging you to give them money so they can keep their jobs. Seriously. As the video goes on, the claims get more and more ridiculous, to the point where someone even threatens that if you don't keep buying Viacom products, Spongebob might no longer exist. And, really, that's the hilarious part. So much of the video is just people begging others to save them. They beg people to give them money. They beg the government to save their jobs. Nowhere, however, do they talk about actually adapting. Nowhere do they talk about making use of what the internet provides to build bigger audiences, to promote better, and to better monetize. Because that's the kind of stuff that Viacom just doesn't do. It just begs others to cover up for its own business failures.

Remember, this is the same company where the CEO made $84.5 million last year (a $50 million raise). I'd embed the video here, but remember that Viacom is trying to sue YouTube out of existence, so they didn't put it up on YouTube... in fact, they didn't put it up in a manner that lets you embed it anywhere. So you'll just have to go to Viacom's website and watch the video directly there yourself... costing Viacom's bandwidth. They could have gotten that bandwidth for free if they'd just posted the video to YouTube... but, as we're told in the video, "free" is "stealing." And it destroys jobs. Except for Viacom's CEO. He's doing okay.

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Let Politicians Know That Startup Jobs Count Too

Mike Masnick — Fri, 9 Sep 2011 15:54:20 PDT

A month ago, I wrote about the paradox of job creation when it comes to politicians. These days, they all just love to talk about how they're creating jobs. After all, the news today is all about President Obama's big new "jobs plan." But, as we've noted, such plans can be tricky. The easiest way for government officials to "create" jobs is just to make work. There can be some infrastructure projects that lead to future job growth, but it's way too easy to get sucked into creating jobs by shifting productive uses to unproductive uses. And, in fact, often the best ways to create real jobs -- through disruptive innovation -- have the horrible first act of killing off jobs. As an example, moving from a telephone network where human operators handled all the switching to one where there was automatic switching could be seen as destroying the jobs of thousands of operators. But it also paved the way to millions of new jobs, once the power of an automatic switched network was realized.

Similarly, when there were plans for "job creation" through investing in broadband, we noticed that most of the plans seemed to really be about handing money to big companies, often at the expense of the small startups and next generation of internet companies who actually create sustainable job growth. As was discussed in the recent letter from entrepreneurs to Congress about PROTECT IP, new businesses and startups are really a key in creating jobs.

So it's great to see that Chris Shipley (who was among those who participated in the PROTECT IP letter) has created a wonderful new site called StartupJobsCount.org, where she's trying to help show that when we're talking about job creation, startups and entrepreneurs should not be left out of the equation. She's asking entrepreneurs to step up and say how many jobs they've created in the last five years:

Entrepreneurs are the engine for economic growth and jobs creation. Virtually all of the growth in U.S. jobs has been driven by companies that are less than 5 years old.

Now, it’s time to put some real numbers behind the conventional wisdom! If your company is less than 5 years old and is employing one or more people, stand up and be counted

If you're an entrepreneur, I urge you to stand up and be counted.

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Top Entrepreneurs Warn Congress: PROTECT IP Will Stifle Innovation & Hurt Job Growth

Mike Masnick — Thu, 8 Sep 2011 02:30:00 PDT

Lots of people have been speaking up about why PROTECT IP is a terrible, terrible idea that will have massive unintended consequences for innovation online. We've seen the biggest names in venture capital tell Congress that PROTECT IP would chill investment in new innovations. We've seen top technologists explain how PROTECT IP messes with fundamental infrastructure and security elements of the internet. And we've had a bunch of well respected law professors explain to Congress that the bill is almost certainly unconstitutional.

One voice has been missing, however: the actual tech entrepreneurs and startup execs who will be impacted most directly, because PROTECT IP will put both the costs of compliance and the burdens of liability directly on their shoulders. Entrepreneurs are famous for staying out of policy debates like this. This isn't a surprise. Entrepreneurs are focused on building the next great innovation and the next great company -- creating lots of new jobs both directly in their companies and via the new innovations and platforms they create.

PROTECT IP is such a dreadful, job killing bill that it's finally sparked entrepreneurs to speak out. A large group of entrepreneurs, both well known and less well known, have teamed up to send a letter to Congress warning about the impact of PROTECT IP, and asking them to reject this bill which is nothing more than an attempt to give a handout to the entertainment industry. Over 135 entrepreneurs have already signed on (yes, including me). Collectively, these entrepreneurs have directly created over 50,000 new jobs in their companies, but more importantly have created hundreds of thousands, if not millions, of jobs via their innovations, platforms and services.

It's great to see such a diverse group of startup entrepreneurs -- many of them serial entrepreneurs -- team up on such an issue. The list of participants includes folks like Evan Williams, the founder of Twitter and Blogger, Ian Rogers, the CEO of TopSpin, Mark Pincus, founder and CEO of Zynga, Dennis Crowley, founder & CEO of FourSquare, Joel Spolsky from StackExchange & Fog Creek Software and Reid Hoffman of LinkedIn. It includes people like Chris Shipley of Guidewire Group, who for years ran the DEMO conferences and Tim O'Reilly (who I'll just assume you know because you've read the books he's published). It includes entrepreneurs from great platforms like Kickstarter, IndieGoGo and GiltGroupe. And there may be some names on the list that you might not recognize today, but who are building the next generation of great startups to produce services that you will use in the future. It's really a who's who of entrepreneurs who helped build the key internet services you use today and will use in the future -- and they're all quite reasonably scared of what PROTECT IP means and how it will chill innovation in the startup community.

All of us who put together this letter want to make sure that the voice of entrepreneurs is heard loud and clear -- and as such, we're still accepting additional signatures from entrepreneurs. If you've been a founder or held a job-creating role at a startup, please sign the letter as well, following the instructions at the top of the document, and we can continue to make sure that the voice of the folks who really create new jobs and support the economy are actually heard from in DC.

Members of Congress and the President claim that they're focused on passing legislation that creates jobs. So why are so many pushing for PROTECT IP, when the companies who actually innovate and create the new jobs for the future are so against it?

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