Techdirt. Stories filed under "lending"

Copyfraud: Copyright Claims On CDs Say It's Infringement To Loan Your CD To A Friend

Mike Masnick — Fri, 28 Dec 2012 08:22:00 PST

We've talked a lot about the concept of "copyfraud," the increasingly common activity of copyright holders claiming more rights than copyright allows. It happens all the time, but sometimes it's really egregious. Wired is reporting on how the super popular band Mumford & Sons CD, Babel includes a copyright warning label that says it's infringement to lend the CD to anyone:

“The copyright in this sound recording and artwork is owned by Mumford & Sons. Warning: all rights reserved. Unauthorized copying, reproduction, hiring, lending, public performance and broadcasting prohibited.”

You can see a scan of the back of the CD here, which includes the warning on the left: Here's a rotated and zoomed in image: While this is clearly copyfraud, the article makes a few important points. First, it's bizarre that they've included this tidbit in their warning, when the boss of the label they're on, Glassnote, has made it clear that "the fans really do come first and word of mouth is important." If that were true, you probably wouldn't lie to fans and tell them its illegal to lend out the CD.

However, the article raises a larger point concerning "first sale rights" and the Kirtsaeng case that the Supreme Court will be deciding one of these days. If the CD were made outside of the US, it's possible that Glassnote/Mumford & Sons could start legitimately banning lending, since first sale rights will no longer apply. Wired quotes copyright lawyer Andrew Bridges (you might recognize his name), who first called everyone's attention to this bizarre choice:

“If this disc was made in Mexico, then it may be that I don’t have the right to lend it to anybody under the plaintiff’s view in the Kirtsaeng case,” Bridges said. “That actually highlights the importance of the Supreme Court’s pending case.”

Of course, while the Wired article suggests this is a new thing, Sneeje helpfully points out that it's not that uncommon. And, if you look around, you can find the same terms on other albums as well, including by Roger Waters and Kanye West -- so it's not fair to blame Mumford & Sons specifically for this.

Spin Magazine claims to debunk the Wired article, also by pointing out that this phrase has been widely used for the past 20 years, and arguing that it's accurate in Europe, due to its directive on "rental and lending rights." Though, Spin's "debunking" deserves a bit of a debunking itself, since the "rental and lending rights" are specific to things like libraries. The specifics of the directive are that it applies to lending "made through establishments that are accessible to the public." The problem of course, with the simple terms used on the CDs, is that they make no such distinction. And though no one will enforce this against lending a CD to a friend, it remains a case of copyfraud, in which the public is being told that they cannot lend the CD due to copyright law, even if that's not accurate at all.

Whether the use of the term is new or not really doesn't much matter in the long run. Spin is right that it's not Mumford & Sons specifically that's the problem here (and it's not clear which CDs get this and which don't), but the inclusion of a claimed prohibition on lending still is a form of copyfraud and an attempted expansion of claimed rights.

Permalink | Comments | Email This Story

The Aftershock Of Stupidity: Lendink Reopens Only To Receive Trolling DMCA Notices

Timothy Geigner — Tue, 28 Aug 2012 15:55:00 PDT

It is easy at times to look at some of the stories of the misinformed or abusive on Techdirt, shake our heads at the stupidity of them, and then move on, assuming the issue is passed. This is a misunderstanding of how things work. Rather, when we take into account factors like chilling effects of these cases, they are more like earthquakes in that there is the initial burst of activity followed by the rippling effect and aftershock.

Take, for instance, the story of Lendink Tim Cushing brilliantly outlined a few weeks back. That story helped to create a firestorm in which a large swath of authors were caught up in the backlash of the internet, all because they couldn't be bothered to both know their own contracts and do even a modicum of investigation into the site they decided to lynch. One would think that such a well-publicized backlash, coupled with what was a fairly impressive number of knowledgeable authors who did know their stuff trying to educate the rest, might have a positive ripple effect in favor of Lendink and sites like it. And, perhaps to some degree, it did. But the ignorance of the offending authors also created a negative ripple that has been felt immediately now that Lendink has reopened its site.

From Lendink's Facebook page we learn that they have reopened. And, upon reopening, they almost immediately received what appears to be a bogus DMCA takedown notice.

"Well, I t certainly did not take long before I received my first post-lynch mob DMCA Violation notice. I received the following email from an attorney this morning and promptly responded. I was afterwards advised that they are going to contact Amazon to have the lend status changed and they expect the books to be removed from my site. Yet another example of how people do not understand their agreements with Amazon and fail to realize that Amazon allows affiliate to sell their books even if they are not lendable."

Lendink then promises to post every single DMCA notice they receive, perhaps banking on the previous internet backlash against authors and rights holders being a deterrent. Now, if this notice was just another ignorant author, that'd be one thing. But, a little sleuthing by the Slashdot crowd seems to indicate that this is just a troll.

A few folks dug and it appears that the "lawyer" who issued it is no lawyer at all, and probably an Internet troll (evidence includes not being listed as a lawyer in PA, using a home address, and sending the takedown from gmail). Or just a really bad lawyer.

The point is that these things don't occur in a vacuum. Regardless of whether the takedown notice is from a lawyer or a troll, the ignorance and overreaction of a group of authors has put Lendink in the sights of others either equally ignorant or else nefarious. The ripples continue and the damage done not completed.

As an author myself, I can't tell my peers how liberating it is to not give a damn about anyone who wishes to share my work. It alleviates me of all the drama against readers. It alleviates me of all potential missteps against legitimate services. It alleviates me of the responsibility for any ripple effects those missteps might cause. Have I read every word of the contracts I've signed? Yes. Do I understand every word of them. Of course not.

Because I don't have to.

Permalink | Comments | Email This Story

Legit Ebook Lending Site Taken Down By An Angry Twitmob Of Writers [UPDATED]

Tim Cushing — Wed, 8 Aug 2012 09:12:41 PDT

[UPDATE: Word is filtering back that threats are being directed at some of the authors pictured or quoted in this post. I will reiterate my comment I posted below about the threats, mainly: DON'T DO IT.

THIS DOESN'T MAKE ANYTHING BETTER.

Techdirt's not that kind of site. I know that because I've been reading this site for a half-decade and contributing to it for well over a year.

If you really just want to make a statement to these writers about how they've lost a customer because of their actions, there are several places to find the names involved. I'm not going to compile a list and post it here as some sort of vindictive troll bait.

IF YOU WANT TO DO THE RIGHT THING, SUPPORT THE BLOGGERS AND AUTHORS WHO DEFENDED LENDINK, AND PATRONIZE LENDINK IF DALE CAN GET IT BACK UP AND RUNNING.]

A bizarre thing happened late last week. A bunch of authors, playing Twitter telephone, managed to take down LendInk, a legitimate book lending site. (This "discussion" has spilled over to LendInk's Facebook page.) LendInk, a matchmaking site for Kindle and Nook users to "borrow" each other's titles, somehow found itself on the receiving end of an irate mob, who accused it of piracy and sent (at least according to the threats) several DMCA takedown notices its way.

As of last Friday, the site is down, presumably as a response to the heavy influx of angry traffic and DMCA notices. There has been no official word from the person running LendInk (listed here on an info page [via Google Cache] as Dale Porter, a disabled Army vet who seemed to be running LendInk as a hobby), but it pretty much seems to be how it looks: LendInk is down and may not be coming back.

Here's a bit of the "outrage," which mostly seems to be people lining up for their turn at the "I spot a pirate" mic:

Update: At least one of these writers (Imran Siddiq) has since admitted to misunderstanding what LendInk does, and retracted his statement.

A variety of misconceptions appear frequently:

1. This is a pirating site

A small amount of investigation shows that LendInk is (was?) not a "pirating" site. No copies of ebooks were stored on its sites. All LendInk did was connect people wanting to lend books with borrowers.

Here's a brief explanation of the process from a review of LendInk by The Next Web:

Using LendInk is as simple as could possibly be. Just browse the new and notable section, or search for the book you want. After checking it’s being offered in the format of your choice you put in a request and the lender has 48 hours to respond.

If you’d prefer to offer a book for someone else to borrow, it’s just a case of entering the title, author, a description and the format you own the book in.

2. All your books are available for free.

All your books only appear to be available. Because LendInk is an Amazon affiliate, any book title searched would be listed at the site. Clicking through would tell you whether the book was actually available (meaning someone had offered it to borrow). If the author or publisher has not authorized lending, then the Borrow button would be grayed out.

The massive wave of overly-concerned authors all searched for their own books and, unsurprisingly, were able to find them listed. What they failed to do was continue any further with the process. Fortunately, someone did and attempted to talk a few people out of their torches and pitchforks.

For people who are wondering why their book is there if it isn't lendable, or was lendable but now isn't, the answer is simple - that site lists every book for sale at Amazon or B&N. Every. Book. Did you notice that they also have links to buy the books? They make money through an affiliate program, if people buy books through their links. So they list EVERY BOOK. In fact, their website might be dynamic in that it generates a page whenever someone searches for a certain book.

I signed up and posted a book to share. I then searched on that book, found it, and said I wanted to borrow it. The site wasn't smart enough to know that I was the same person.... So what happens is the site sent me an email saying someone wanted to borrow my book, with "yes" and "no" links back to the site. When I clicked the "yes, I'll lend it" link, I simply got a page that said here's the name and email address of the person who wants to borrow your book.

No mystery. Nothing illegal. It lists every possible book. Some aren't lendable. LendInk is hoping you'll buy the books using its links, if you can't borrow them. End of story.

In addition to helping more readers read more books, LendInk also (via its affiliate links) helped sell books. Sure, every sale put 6% into LendInk's pockets, but it's no different than affiliate links at any other site. LendInk wasn't taking advantage of authors. Every time it made money, the authors made money.

3. I did not give LendInk permission to lend out my book.

This is the most common complaint and, like the rest of this list, is completely wrong. The fact is that most of these authors did grant permission for lending via their royalties contract with Amazon.

If you publish through KDP (whether or not you are in Select) and are at the 70% royalty rate, then your ebooks are lendable. Period. End of discussion. If you're at the 35% royalty rate, then you can opt in to make them lendable.

This has NOTHING to do with the Kindle Owners Lending Library for Prime customers. This is not a "borrow" under KDP Select. This is merely lending a legitimately purchased Kindle copy.

Some Kindle books are lendable. When a purchaser buys a copy, they can choose to lend it to a friend. When they do this, the ebook temporarily disappears from their Kindle and appears on their friend's Kindle. After 2 weeks, it disappears from their friend's Kindle and reappears on theirs.

It is 100% legal, and it's what you agreed to in the terms of KDP.

A publisher even weighed in on the subject and declared LendInk legitimate:

Here’s how it works: if you buy an ebook on your Kindle or Nook, you have the ability to lend it out to anyone else with a Kindle or Nook (Kindles lend to Kindles, Nooks to Nooks, etc.). This website connects ebook owners with others who want to borrow ebooks. So, instead of just borrowing from a friend, you can borrow even though you don’t know the person. All they do is match lenders and borrowers together. (They’re like a dating service.) The actual lending happens through Amazon, Barnes and Noble, or wherever the ebook was originally purchased, and that’s completely legit.

Basically, LendInk offered a legitimate service much like Lendle, but for whatever reason, a certain percentage of the writing community decided LendInk was offering pirated copies to everyone. Once a good witch hunt gets going, no one's going to stop until a witch is found... or created. Shawn Lamb of Allon Books crafts up a singular "witch" in an update to her gloaticle (Achievement Unlocked: Portmanteau'd!) "Pirate Site Sunk By United Broadside!":

IMPORTANT AMENDMENT: For those of you jumping on me and other authors from the take down of a site - know this - it was a copycat site! The subtle difference is found in the title "Lendink" with a small "i" not "Lendlnk" with an "l". They hijacked the name under the pretense of getting author's permission for pirating e-books. Collateral damage is regrettable, but we were only protecting our books, as giving permission to an unauthorized Lendink site would result in our books being removed from Amazon.

Lamb's bizarre theory of small "i" vs. big "I" site-jacking is just sad. There's simply no factual basis for this statement. Searches are not case sensitive and as for the URL, it's always going to be lowercase no matter how the site owner chooses to spell it. Attempting to justify your zealous overreaction by just making shit up isn't going to make your overreaction look any better.

The most popular piece of witch hunting equipment was this response many irate authors obtained from Amazon after informing it about LendInk's "piracy:"

Hello,

We have not authorized lendink.com to loan your book and have not provided your file to them.

If you've found your work available on an unauthorized website such as lendink.com, we suggest contacting that website to confirm your rights and request removal of your work. If you distribute your book through other sales channels, you might contact them to inquire as to whether they have authorized the inclusion of your book on lendink.com.

Our lending program allows a purchaser to lend a title once and does not allow the recipient to re-loan that book. For more information about Kindle book lending, check out this page:

http://www.amazon.com/gp/help/customer/display.html?nodeId=200549320&#loan

I hope this helps. Thanks for using Amazon KDP.

This was (and still is) held aloft by many authors as evidence of wrongdoing. But it really isn't. It's nothing more than boilerplate. Here's author Amanda Brice (again), breaking this letter down:

This is a standard response from the customer service department, who is NOT the Legal deaprtment incidentally.

No, they did not authorize LendINK to lend books. HOWEVER, what LendINK is doing is the same as Lendle eBookFling or een the lending subforum right here on Kindleboards. It's no different than simply lending your book to your mom (which is 100% authorized through Amazon, btw). This is just doing it on a bigger scale.

Amazon did not provide your file to LendINK because nobody has provided any files to LendINK. LendINK doesn't actually have any files. They are simply the clearninghouse for people to meet up with others who want to borrow legitimate copies that they ahve purchased.

Amazon touts the fact that many of their Kindle books are lendable. Not able to be borrowed through the Prime library, but that customers can lend their copy ONCE to someone for up to 14 days. During the time the book has been lent, it becomes unavilable on the owner's Kindle and can only be read on the borrower's Lindle. At the end of 14 days, it disappears from the borrower's Kindle and reappears on the owner's Kindle.

This is not rocket science...

The Amazon Customer Service department is giving a stock response. It would be a different response if you actually spoke to someone in Legal, as Legal understands that this type of set-up is, in fact, tactitly authorized by the fact that they have created a system to allow for lending. (And from a policy standpoint, this type of system would discourage piracy.)

Before the site was taken/knocked offline, any one of these authors could have drawn the same conclusions as these helpful forum contributors, but most seemed to be caught up in the excitement of the hunt. An in-depth post by April Hamilton of the Indie Author blog points out everywhere these authors went wrong and how easily it could have been prevented. Fortunately, she also saved the pertinent parts of the LendInk FAQ, which cannot be reached by Google Cache or the Internet Archive:

Is the loaning of eBooks really legal? Isn't this the same as file sharing?

Yes, loaning of certain eBooks is legal and No, it is not the same as file sharing. The key difference between the two is that the loan status of an eBook is directly dictated by the publisher and file sharing is usually done without the publishers consent. Working with Amazon.com and Barnes and Noble, the publisher's make their eBooks available for loan under very strict rules. The actual book loaning process is handled by Amazon.com and Barnes and Noble, not by LendInk.

I am a Publisher or Author of a book on LendInk, how did you get a copy of my book?

First, let us explain up front, we do not have a copy of your book. This is actually a common misunderstanding of how LendInk functions. No book has or will be stored on any LendInk server, ever. The title of the book is entered by our members and the book information is fed to us by an automated link between LendInk and Amazon or Barnes and Noble. Our servers only store our member contact information and the basic book information such as the author, ASIN and book description. We do not even store the book cover artwork.

It's all said and done at this point. LendInk is dead, at least for the time being. It's bandwidth is burnt and if it ever gets back online, it's very likely going to be facing down DMCA takedown notices for content it never had. And for what? Meanwhile you've got authors patting themselves on the back for knocking the site offline, all because some authors just don't like the fact that someone enjoyed their work without paying for it. Here's a couple of lovely quotes:

From the Kindle Boards:

Am I proud they have been shut down? Am I proud to have stood up for my legal rights as author? You betcha! If they were a legitimate site and had written consent from each and every author to display their work for free (forfeiting their royalty income as a result) then I doubt very much that the site would have suddenly disappeared overnight. I am tired of plagiarism, book piracy and cheap-*ss scum bags who won't part with a measly $2.99 or $4.99 to support authors and show respect for their hard work, not to mention the graphic artists, editors, photographers who also contributed to the birth of an author's ebook.

From the Amazon support board, an attack on the right of first sale:

Up until now I was just getting fed up with folks listing my books on ebay, amazon and third party sites selling the createspace paperback version at highly inflated prices!

If you can't read your own Terms and Conditions and can't parse a website well enough to determine whether it's simply performing an affiliate search or offering up pirated goods, maybe you shouldn't be in the ebook business. And if you can't deal with a few unpaid readings, go shout at your local library or something else as equally alienating and useless. Because no matter how much you yell at people for sharing, you can't have all the money.

Permalink | Comments | Email This Story

If Libraries Didn't Exist, Would Publishers Be Trying To Kill Book Lending?

Glyn Moody — Thu, 5 Jan 2012 07:37:45 PST

Against the background of today's war on sharing, exemplified by SOPA and PIPA, traditional libraries underline an inconvenient truth: allowing people to share things – principally books in the case of libraries – does not lead to the collapse of the industry trying to sell those same things. But publishers really don't seem to have learned that lesson, judging by this article in the New York Times about the nonsensical attitude they have to libraries lending out ebooks:

In their eyes, borrowing an e-book from a library has been too easy. Worried that people will click to borrow an e-book from a library rather than click to buy it, almost all major publishers in the United States now block libraries' access to the e-book form of either all of their titles or their most recently published ones.

This suggests that if libraries didn't exist, and somebody tried to set one up, publishers would use the same logic to refuse to sell traditional books for that purpose. History shows that's an absurd position, but equally absurd are the efforts of publishers to make borrowing ebooks less convenient:

To keep their overall revenue from taking a hit from lost sales to individuals, publishers need to reintroduce more inconvenience for the borrower or raise the price for the library purchaser.

The article invokes the example of paperbacks published some time after the hardback edition as an equivalent situation. But that's about pricing: publishers don't try to make it "inconvenient" for people to borrow paperbacks from libraries by creating special low-quality copies that fall to pieces after a few loans (essentially what Harper Collins does with its ebooks), nor do they add surcharges to the paperback price to try to squeeze more from the libraries that lend them out.

Sadly, publishers really are thinking along these lines:

Ms. Thomas of Hachette says: "We've talked with librarians about the various levers we could pull," such as limiting the number of loans permitted or excluding recently published titles.

Publishers are so obsessed with stamping out this ebook sharing scourge that they are oblivious to two likely consequences of their current approach. One, obviously, is increased piracy: if potential customers want to try out an ebook before buying it, but it's not available for them to borrow at their local library, it will certainly be available somewhere online, if they look hard enough. The risk is that having procured an unauthorized copy, they don't then go on to replace it with an authorized one.

The other problem for those publishers boycotting public libraries is evident from a comment by a librarian quoted in the New York Times piece:

Ms. Nesbitt adds, however, that many of the library's patrons aren't aware that other publishers are withholding e-books from it.

If library users aren't aware that certain titles are being withheld, that means they haven't asked for them - probably because they haven't heard of those ebooks, or think they won't be interested. Keeping titles out of public libraries makes it less likely that readers will ever find out about them or change their minds. After all, as the article goes on to say, there is no lack of alternatives:

While many major publishers have effectively gone on strike, more than 1,000 smaller publishers, who don’t have best-seller sales that need protection, happily sell e-books to libraries. That means the public library has plenty of e-books available for the asking — no waiting.

A familiar pattern emerges. Small, innovative publishers who are ready to adapt, reap the benefits by meeting the growing demand for ebooks at local libraries – and doubtless picking up knock-on sales as a result. Meanwhile, big, sclerotic publishers resist trying out new business models, preferring to make the use of digital formats for lending as "inconvenient" as possible – in the forlorn hope that readers will just give up and buy something. We all know how that story ends.

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

Permalink | Comments | Email This Story

Authors Guild Threatens Amazon For Daring To Allow Library Lending Of Ebooks

Mike Masnick — Thu, 17 Nov 2011 12:35:00 PST

Ah, the Authors Guild. I don't think there's any group out there that has done more to hold back authors and important innovations that those authors need. Any new technology or innovation that comes along, the Authors Guild reflexively freaks out about it. Full text search to help you find books you might want to buy? Not allowed. Letting ebook readers use crappy text-to-speech to read aloud? The Authors Guild makes up a mythical "audio right," and threatens to sue. Then, of course, this is the same Authors Guild who is suing Google for scanning books and suing five universities for making it easier for students to access orphaned works.

So I guess it should come as no surprise that the group is now freaking out about Amazon's extremely limited "lending library" feature for ebooks. The service lets Kindle owners "borrow" one book a month for free. To appease potentially angry authors and publishers, Amazon made it clear that this doesn't actually impact revenue to publishers.

The "vast majority" are there following an agreement with the publishers to include the books for a fixed fee, while "in some cases", Amazon said it was purchasing the title under standard wholesale terms each time it is borrowed, "as a no-risk trial to demonstrate to publishers the incremental growth and revenue opportunity that this new service presents".

The Authors Guild's response is to continue to portray itself as out of touch and clueless on important innovations. It suggested that none of the books in the "lending library" are there legitimately. And it doesn't care that Amazon still pays when the books are borrowed. Because the Authors Guild's out of touch views also seem to include a scorched earth provision, where any new innovation they don't like must be destroyed if it ever so slightly changes the way people enjoy books.

Permalink | Comments | Email This Story

How Long Until A Lawsuit Is Filed Against eBook Trading Service?

Mike Masnick — Wed, 26 Jan 2011 19:03:00 PST

We've already talked about how people are starting to freak out about "lending clubs" forming on Facebook to share Kindle ebooks, now that Amazon has launched a ridiculously limited "lending" feature. Not surprisingly, such efforts are quickly moving beyond Facebook as well, such as with the launch of a service called eBookFling, which is basically a marketplace for matching up folks for "lending" such limited ebooks. I have no clue how well this particular service will work -- and I'm curious to see how both publishers and the Amazons and Barnes & Nobles of the world react to the fact that they're charging $1.99 for folks who don't have any "book credits" to get a book. I doubt many people will actually pay, but sooner or later I imagine someone's going to sue, and it'll make for quite the interesting lawsuit...

Permalink | Comments | Email This Story

Fearmongering: Kindle Lending Feature Will Lead To 'Lost' Book Sales?

Mike Masnick — Mon, 3 Jan 2011 13:40:20 PST

We've already pointed out how Amazon's new "lending" feature for Kindle ebooks is extremely limited, in such a way that it's barely useful, but already we're seeing fearmongering about how that feature is going to create "lost" book sales. Glyn Moody points us to an article at The Next Web, which discusses how some folks have formed a "lending club" on Facebook, so that they can find a larger pool of people to lend books to and from. And, the article's author warns, this inevitably means "lost" book sales:

Whether Amazon anticipated users organising themselves into a lending club or not, we're not sure but it's likely to result in many lost sales. After all, most books can be comfortably read in 14 days. If all you need to do to get hold of Kindle books is to request a loan from a stranger online, how many will you actually bother to buy?

The article goes on to ask: "can Amazon really do anything to stop this growing?" and wonders if publishers will kill off this feature entirely.

Let's try rewriting that paragraph in a manner that highlights the ridiculousness of the argument:

Whether library organizers anticipated users taking out books or not, we're not sure but it's likely to result in many lost sales. After all, most books can be comfortably read in 14 days. If all you need to do to get a hold of books is to go to the library and take one out, how many will actually bother to buy?

And yet, libraries did not kill book sales. At all. Separately, one of the reasons why I still haven't joined the ebook parade is that I like being able to actually lend out books to others. So, by the argument above, it's the DRM feature on ebooks today that has meant "lost sales." So perhaps we should just get rid of that? Limiting the usefulness of ebooks with crazy restrictions makes them a lot less valuable, meaning decreased sales. Ignoring that and thinking that only this sort of extremely limited lending will somehow harm ebook sales is pure fearmongering and is based on very little evidence.

Permalink | Comments | Email This Story

Kindle To Let You Lend Books, Just Like A Real Book... Except Not

Mike Masnick — Mon, 25 Oct 2010 08:30:48 PDT

Apparently, Amazon is adding a feature to the Kindle that will let you "lend" books to other Kindle users. Of course, it sounds quite like the ridiculously limited lending found on the Barnes & Noble Nook ebook reader as well. You see, when you "lend" the book, you can't read it yourself... "just like a real book." But, um, you can only lend it to other Kindle users, ~~just like a real book~~ (oh, no actually). And, you can only lend it for 14 days, ~~just like a real book~~ (oh, no actually). And... you can only lend it out once, ~~just like a real book~~ (oh, no actually). It really makes me wonder how incredibly soul-deadening it must be to be a developer working on products like this where you're focused on limiting what the technology allows.

Permalink | Comments | Email This Story

Intellectual Ventures Lending Its Patents To Members To Sue Others

Mike Masnick — Wed, 3 Mar 2010 07:49:00 PST

We've certainly written plenty about Intellectual Ventures, the giant, incredibly secretive, patent hoarding operation that has convinced a bunch of companies to pay hundreds of millions of dollars in a sort of pyramid scheme protection racket, to avoid getting sued on any of the patents that it holds. But now it's taken things a step further. Last year, we saw how at least one IV patent had shown up in a patent lawsuit, and now Zusha Elinson is reporting that Intellectual Ventures has effectively loaned out one of its patents to member company Verizon, with which it can sue TiVo, in response to a lawsuit TiVo filed against it.

Yes, effectively, Intellectual Ventures is becoming an arms dealer in patent nuclear war.

Think about this for a second. TiVo sued Verizon over patents. Traditionally in patent lawsuits between two big tech companies, the sued party then finds some of its own patents that the other company is infringing on and then counter-sues. But, in this case, apparently Verizon couldn't find anything good, and IV dug through its own portfolio and transferred the rights over to Verizon so Verizon could pound back on TiVo. This must be what Verizon paid Intellectual Ventures $350 million for. The right to get handed patents that it has no intention of using or implementing, but over which it can sue others. I don't think this is what Thomas Jefferson envisioned when he set up the patent system.

Amusingly, Intellectual Ventures tries to position this all as a good thing:

Don Merino, vice president of licensing at IV, said it's an example of IV taking "a much more customer-centric approach."

"We want to figure out how to get out of the, 'I win, you lose' to a much more collaborative, 'We both win,'" said Merino.

Well, sure. Unless you're TiVo. Or the general public who would prefer that these hundreds of millions of dollars getting tossed around went towards actual innovation instead of lawsuits.

Permalink | Comments | Email This Story

Libraries Cost Publishers $100 Billion Per Year! Ban Them!

Mike Masnick — Wed, 20 Jan 2010 14:00:09 PST

So a whole bunch of you submitted the story last week about a "study" claiming that unauthorized downloads of books was "costing" the publishing industry $3 billion per year. I avoided the study for a variety of reasons. Mainly, the reason I ignored it was because it was done by a company selling "solutions" to the (non) "problem," Attributor is a company that has a very long history of putting out totally ridiculous studies like this to try to sell more of its pointless service. And, of course, if you looked at the details of the study, you realized how ridiculous it was -- designed solely to generate headlines. So we ignored it.

However... we feel compelled to mention it now because Slashdot points us to an absolutely brilliant response by a blogger who used the same basic methodology to point out that, according to this line of thinking, libraries are costing publishers $100 billion per year:

Hot on the heels of the story in Publisher's Weekly that "publishers could be losing out on as much $3 billion to online book piracy" comes a sudden realization of a much larger threat to the viability of the book industry. Apparently, over 2 billion books were "loaned" last year by a cabal of organizations found in nearly every American city and town. Using the same advanced projective mathematics used in the study cited by Publishers Weekly, Go To Hellman has computed that publishers could be losing sales opportunities totaling over $100 Billion per year, losses which extend back to at least the year 2000. These lost sales dwarf the online piracy reported yesterday, and indeed, even the global book publishing business itself.

From what we've been able to piece together, the book "lending" takes place in "libraries". On entering one of these dens, patrons may view a dazzling array of books, periodicals, even CDs and DVDs, all available to anyone willing to disclose valuable personal information in exchange for a "card". But there is an ominous silence pervading these ersatz sanctuaries, enforced by the stern demeanor of staff and the glares of other patrons. Although there's no admission charge and it doesn't cost anything to borrow a book, there's always the threat of an onerous overdue bill for the hapless borrower who forgets to continue the cycle of not paying for copyrighted material.

Good stuff. The blog post goes on to discuss a shifty "meeting" of so-called "librarians" set out to destroy the publishing industry. Satire at its finest. Of course will the mainstream press remember this the next time Attributor puts out some silly report? Probably not...

Permalink | Comments | Email This Story

eBook Market Gets More Crowded... But... Still Many Limitations

Mike Masnick — Tue, 20 Oct 2009 18:56:45 PDT

As lots of tech sites are reporting (and as was leaked not too long ago), Barnes & Noble has released its own ebook reader, clearly designed to compete with the Kindle. The good news is that it takes aim at some of Kindle's weaknesses, such as by supporting more open offerings, like ePub, and also by allowing you to "lend" books to others. But the lending is pretty limited. You can only lend a book once, and then only for two weeks, after which the lent book disappears. It's nice that you'll be able to buy books from other retailers and use them on the Nook, but the limitations still seem pretty serious. Still, more competition is good, and even a slight step towards a more open solution is a step in the right direction. Next up: we just need someone else (perhaps not tied to a bookstore) to offer an even more open device.

Permalink | Comments | Email This Story

Do Libraries Need Permission To Lend Out Ebooks?

Mike Masnick — Fri, 16 Oct 2009 17:46:16 PDT

Reader OG points us to this NY Times article about how libraries are increasingly offering ebooks for download. This, of course, seems like a good idea, and fits in with the purpose of a library, but where the article gets either laughable or head-bangingly annoying is where it starts discussing how publishers have serious problems with this whole concept. Some publishers are refusing to allow libraries to lend out their ebooks...which makes me wonder why the publishers have any say in the matter. Thanks to the right of first sale, a library should be able to lend out an ebook if it's legally purchased it without having to get the publisher's permission.

Furthermore, the rest of the discussion is just silly. There are arguments about how many ebooks can be "checked out" at once or how the DRM works (which blocks the most popular ebook readers from being supported). There's also an issue of publishers charging libraries much higher prices for ebooks, and scoffing at a librarian who suggests that libraries should be allowed to offer as many copies as needed of an ebook to lend at the same time, and just pay the publishers a nominal fee.

It's hard to describe how insane this whole discussion sounds. Here you have a fantastic tool to support a library's main purpose in the world, and we're arguing over what sorts of artificial restrictions to set up to limit that tool from actually being useful? It's as if we discovered a way to make all the food the world ever needed, and we sit around talking about how to make sure that most people don't get fed. It would make me laugh if it weren't so disturbing that people seem to think this is a good thing.

Permalink | Comments | Email This Story

Can A Library Lend A Kindle?

Mike Masnick — Wed, 8 Apr 2009 08:59:00 PDT

Michael Scott point us to a fascinating question that an increasing number of libraries are starting to ask: is it legal to lend out a Kindle with some ebooks? Amazon says no -- and claims that it's a violation of the terms of service, but libraries are claiming that isn't true. The terms only bans lending out the ebooks themselves... not the device that has a purchased ebook on it (an important distinction). So, some libraries have been buying Kindles and purchasing a series of books (usually best sellers that are in high demand) and lending out the device. However, Amazon claims that it won't discuss "enforcement" on this issue, which might mean that it's not doing any -- or might mean get ready for the lawsuits. Of course, this isn't an entirely new issue. Years back, we talked about some libraries lending out audiobooks on iPods, but it seems like the Kindle situation could get a lot more attention... including the legal kind of attention.

Permalink | Comments | Email This Story

Cash Rich Tech Companies Becoming Banks?

Mike Masnick — Thu, 30 Oct 2008 15:57:00 PDT

In one of my posts about the financial crisis, I noted two important things: that if banks really did stop lending money, there would be opportunities for others to start lending (though, the question was whether or not widespread fear would stop that process) and that non-bank businesses might start adjusting their own "loans" in the form of changing the terms on deals. Of course, what we were talking about there was businesses decreasing the amount of credit they offer customers by doing things like shrinking the terms on a deal from payable at net 60 days to net 30 days.

What we didn't necessarily count on was that cash rich tech companies might go in the other direction -- and look to fill that opportunity to lend where banks had failed. Apparently vendor financing is suddenly a very hot business, with various tech companies suddenly finding a lot more interest in their leasing and vendor financing programs. Effectively, what's happening is that these tech firms with money are taking over the role of lenders from the banks. Assuming the loan risks are low, this could actually work out quite well for these tech companies in the long run. It's at least something worth watching. Valleywag worries that these sorts of deals almost always end badly -- but that's not necessarily true. It really depends on how the programs are run, and how well they measure the risk associated with certain companies.

Permalink | Comments | Email This Story

AT&T Asks You To Pay In Advance To Handle Its Credit Problems

Mike Masnick — Fri, 3 Oct 2008 18:22:00 PDT

Despite explaining how the financial crisis will impact everyone, beyond just Wall Street, there are many people who still insist that it will have no impact on them. That's simply untrue. While the impacts may seem small and remote, when added up, they'll be noticeable. Richard Ahlquist writes in to show us a perfect example of this. AT&T has discovered that the commercial paper it relies on is now a lot more difficult to get, causing a bit of a cash crunch for the company. So how is it dealing with it? By pushing that cash crunch to you. Rather than its usual habit of billing you for the month that just past, AT&T is telling customers it's now billing them for the month ahead -- meaning that your latest bill may be double (paying for last month and next month). Effectively, AT&T is changing the credit terms on its customers, from net 30 to prepay. Sure, it may not be a huge deal that your telco bill doubles for one month only, but that's still money that's out of your pocket 30 days earlier -- and if other vendors do the same, it could be quite noticeable.

Permalink | Comments | Email This Story

So How Will The Financial Crisis Impact The Wider Economy?

Mike Masnick — Thu, 2 Oct 2008 12:00:30 PDT

Earlier this week, we received a tremendous response to our post about the financial crisis and how it might impact the tech industry. We received multiple requests for more posts along those lines -- and American Express has decided to help foster the discussion. This post is being posted both here and at American Express' Open Forum blog. Also, more importantly, AmEx is sponsoring a Techdirt Insight Community Case to facilitate a larger conversation about how this impacts small businesses, and what they can do during this crisis. If you're a small business owner concerned about the crisis, one way to make a little extra money is to take part. Sign up here to provide your own analysis. You can also comment here (or on the AmEx site), but if you want to earn some money, you need to sign up and submit your insights as a member of the Insight Community. So, now let's kick off a discussion on how the financial crisis might impact the wider economy, with a special look at the small business market.

Getting beyond Wall Street

I discussed some of that in the original post, but many people are still having trouble seeing how this crisis spreads beyond Wall Street financial firms (or, in some cases, their own stock portfolios). There are still plenty of people screaming out that these financial firms need to be punished or done away with completely, without any recognition of how that might flow through the rest of the economy. The New York Times has an excellent writeup, noting that people said the same thing as the Great Depression was happening, as well -- again, not realizing that destruction on Wall Street can flow through the rest of the economy.

The basic problem is the fear that the credit markets will simply dry up. If no one will lend money (or it simply becomes ridiculously expensive to borrow money), then some very basic economic functions cease to work. This may start out at a high level with bank to bank loans and bank to business loans, but it can also filter down to things like your mortgage (if you thought things were bad before, wait until adjustable rate mortgages reset with even higher interest rates, contributing to this spiral), car loans and even credit card payments. At the top of the chain, banks are increasingly afraid to lend to each other fearing that whoever they lend to (even for very short term loans) may default before the money can be paid back.

Already, some companies are seeing the direct impact. For example, Caterpillar, the maker of construction equipment is a company you would think would be separate from the financial mess on Wall Street. It has great credit and a long history of being good for paying up any debt. Yet, in a matter of days, the interest that Caterpillar has to pay to borrow has shot up.

Debt isn't a bad thing

Now, there are those who will say that any "borrowing" or "debt" is somehow bad (we had a few such comments on the first post), but that shows a fundamental (and, somewhat dangerous) misunderstanding of basic economics. Borrowing money and taking on debt is not, by itself, a bad thing. In fact, it's a very, very good thing. If you can borrow money at one rate, and invest it more profitably, you can contribute to economic growth and provide important goods and services. It's at the very core of a functioning economy. Money moves around so that it can be invested in more profitable endeavors, and that benefits all of society, by making sure that the money is more efficiently put to work.

Of course, with any amount of debt, there's always a "risk" involved in whether or not the money (and interest) will get paid back. The amount of interest generally represents the cost of that risk. Higher risk requires more interest. Thus, there are a variety of different ways that you can invest your money with different risk/reward profiles. Lower risk gets a lower return and higher risk, with its higher chance of default, should net you a larger return in the long haul.

However, the fear of various banks defaulting at the top of the pyramid is increasing the risk down the entire chain, even to the point that relatively "safe" investments are suddenly being seen as risky. Part of that is due to uncertainty about how the crisis will impact others (sort of a self-fulfilling fear) and part of it is due to a still murky understanding of the risk involved in the assets at the heart of all of this mess: the various mortgage backed securities you keep hearing about.

So what happens if things get worse?

Well, it won't be pretty. Credit is such an important part of the entire economy that it's almost impossible to figure out all of the ramifications of a near total credit crunch. Plenty of companies rely on commercial paper and short-term, low risk loans to finance certain operations, while others use it to get a small, but safe, return themselves. If that were to completely collapse, money would have a lot of trouble moving from where it is to where it would be most efficiently put to work for the economy. Effectively, important projects would get starved of necessary cash and die.

That may happen to some projects all the time -- and it's a natural part of the market -- but if it happens across the board, a lot of companies could go bankrupt. A lot of useful investments would go to waste, and (more importantly) the next set of important projects that require investment wouldn't be able to get the necessary money. It would shrink the economy and harm pretty much everyone.

But won't that be an opportunity for someone else to lend?

Yes, indeed. And that's what many free market supporters are betting on. There is still money out there, and it can be put to work. The trillion dollar (plus) question at this point is how much of that money really is out there and how quickly can it flow through the economy (and at what price). Some argue that since so many companies rely on lending out money to make money, that the idea that it would cease is almost impossible to imagine. And that's true to a certain extent. There will always be some money out there to lend, but the question is how much and at what price. With too little at too high a price, you end up with significant portions of the economy screeching to a halt.

While the markets are normally quite efficient, you do get periods of... irrationality. Mostly, we think about it from the "irrational exuberance" side, which leads to bubbles. But it happens at the other end as well, though usually to a lesser extreme. If almost no one's lending, the result is a bit of a herd mentality, where very few people want to be the first to step out on that ledge, as they're afraid that the ledge will get quickly chopped off. Some daring souls may step out, but will it be enough to really keep the economy chugging along?

That sort of "crowdthink" risks severely thinning the amount of capital moving around the economy. Even if certain companies know that they should be lending the money they have sitting idle, they'll be too afraid to step out on the ledge since no one else is doing it. Those in charge of making lending decisions start thinking: "what do they know that we don't know?" -- and that mentality paralyzes the lending market.

So, what does it all mean for a small business operator?

Well, that really depends on what sort of business you're in. If you're a venture-backed startup, it's probably not as big a problem, immediately. As we originally noted, top tier VCs are pretty secure with the funds they have, and as we saw after the dot com bubble, the big institutional investors still can't resist allocating a segment of their cash to VC funds. That money is pretty safe. A good venture capitalist should help its portfolio weather the storm. By the way, that doesn't mean showering them with too much cash. Companies that have raised a ton of cash aren't necessarily better off, contrary to popular opinion. A lot depends on what business they're in, how focused they are on an actual business model and how much they're actually burning. As we saw after the last dot com bubble burst, it was some of the most heavily funded companies that went belly up first -- because they had focused too much on raising money and not on building a business.

But, of course, venture backed high growth companies are a tiny, tiny segment of the small business arena. Most small businesses will face a different set of challenges. While they may not rely so heavily on regularly tapping into borrowed money, that doesn't mean they're not exposed in many ways. Any sort of expansion capital will be much harder and much more expensive to get. That will make it more difficult for some of those small businesses to make the investments necessary to become big businesses.

More importantly, their own customers may be exposed as well. Many small businesses effectively provide "loans" to their customers, in giving terms of payment, such as net 30 or net 60 (allowing the customer to pay within 30 or 60 days, rather than upfront). Unlike constantly fluctuating interest rates, small businesses generally don't change those sorts of terms with any regularity. So, many small businesses actually become a lot more exposed: they're "lending" money at the same rates as before, while the rest of the money flowing around the economy has become more expensive.

With that happening, more customers can be expected to default, putting more pressure on the cash flow of the business. And hiccups in the cash flow will be harder to overcome in the usual way: it will be more difficult and expensive to get a small business loan or a line of credit. Thus, it becomes more difficult to meet payroll and could result in layoffs. Companies may also try to tighten up their payment terms, but that effective "raising" of the interest rate can scare off customers, as well. Already, we're seeing small businesses being advised to push for early payment and change the terms of payment they offer customers.

Most of this won't happen immediately for most businesses. It certainly will impact some in the very near future (and a few companies are already experiencing problems). The real worry is the cascade effect of this happening to more and more small businesses, putting even more pressure on the overall economy. More companies having cash flow problems means fewer customers for other companies, as well, accelerating the whole cycle.

So what do you do?

If you're a small business: focusing on cash becomes king (it should always be, but even more so at this point). Companies won't be able to rely on lines of credit as much as they have in the past, and should see what can be done to lock in any kind of line of credit or opportunity for a decent loan if they can get it. Basically, companies need to prepare themselves for the possibility of money not flowing, customers not paying and additional economic hardship.

But, beyond that, as with any such situation, new opportunities open up. It really depends on what business you're in, but if you provide a product that is better/cheaper/more efficient than what others are using, this becomes a sales opportunity. Focus on letting customers know that they can conserve cash by using your product instead. Plus, look for new areas that you can invest in safely and cheaply, recognizing that these sorts of financial messes do pass, and there will be tons of opportunity on the other side if you can grab it.

Permalink | Comments | Email This Story