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Maximizing Profits Doesn't Mean Screwing Your Customers

Michael Masnick — Fri, 5 Sep 2008 19:42:00 PST

A few years back, we wrote a post debunking the ridiculous notion spread by some that Craigslist was somehow "anti-capitalist" or not "maximizing profits" because it actually offered most of its services for free. As we noted, much of Craigslist's long-term success was because of these decisions -- which in all likelihood did increase overall profits for the company in the long run by building up further trust in the company. It may not have maximized profits for this quarter, but it most likely was doing a pretty good job in generating profits for the long haul by keeping customers happy, rather than trying to squeeze them for every immediate dime (and who was just saying that Silicon Valley doesn't have a long term view?)

Now we've got another similar story, as the LA Times is positively amazed that the popular virtual world Habbo Hotel limits its users to spending no more than $35/month, on the theory that many of its users are teenagers, who could get sucked into spending on stuff, which could lead to eventual backlash. Its CEO made this clear in a recent interview, saying: "We didn't want a situation where teens were raiding their parents' credit cards to be able to play.... We really don't want teenagers to spend more than the price of two movie tickets a month on Habbo."

So, how does the LA Times describe this decision? It points out, partly in jest, that "turning down money seems un-American." Again, even if this wasn't meant as a serious comment, it's similar to the silly claims about Craigslist. Habbo Hotel has simply made a strategic long-term decision on ways to best maximize its success for the long haul. And, part of that probably included the calculation that Habbo would have been in quite some trouble if news stories started showing up about kids bankrupting themselves buying virtual trinkets for their Habbo Hotel world. Limiting how much people can spend isn't anti-American or anti-capitalist or even anti-profit maximization. It's just taking a much longer term view of the best way to maximize profits over the long run.

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Disc Makers Convince Themselves That Discs Are Here To Stay

Kevin Donovan — Fri, 5 Sep 2008 18:22:59 PST

Remember all that hype about the paperless office? The paperless home? Heck, even the paperless life! Well, so do some Sony executives who think the persistence of paper proves that Blu-Ray discs is here to stay. Speaking at an expo in Denver, Sony SVP Andy Parsons said, "I'm fond of recalling the old visions of the past that the paperless office would completely obliterate the need for paper. It seemed like a very reasonable, logical prediction decades ago that turned out to be completely wrong." The only problem with this self-promotional position (besides the fact that recent research shows younger people aren't interested in using paper) is that it ignores the many formats of information that have come and gone. Paper is unique in its ubiquity, but Sony should know all about formats which die; after all, they invented a couple. While discs may be around for a while due to existing infrastructure, the clear trajectory is towards digital only as evidenced by the swing towards net-centric devices like Apple's MacBook Air, the iPhone and Dell's new netbooks. As bandwidth and net-connected devices increase, shiny pieces of plastic will disappear (for everyone but the collectors) along with their tape-based predecessors.

Kevin Donovan is an expert at the Techdirt Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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Court Says Employees Have No Expectation Of Privacy For Stuff On Company Owned Computers

Michael Masnick — Fri, 5 Sep 2008 17:06:00 PST

A court ruling in New Jersey doesn't seem all that surprising, but may lead to more legal questions in the future. The case involved an employee who was stealing from his employer. The employee was eventually found guilty of the theft, but argued that the evidence used against him was gathered illegally, in that it was in a password protected file on his company-owned laptop. It's actually a little more confusing, as the guy actually claimed the laptop was his, but that turned out not to be true. He had originally purchased the computer using his employers credit card... but then still pretended the computer was his personal laptop. Yet, later, he "sold" the laptop to the company -- so realistically, the company had bought the laptop twice.

So, then the legal question was whether or not the guy had a "reasonable expectation of privacy" for stuff stored on that laptop, especially in a password protected file. The court ruled no, that an employee does not have a reasonable expectation for privacy, and that, effectively, anything on the computer is fair game for the employer (even if it's password protected).

You can understand the reasoning there, as it makes sense that a company should feel free to go through the contents of a computer it owns. However, it does raise some other questions. Earlier this summer, we wrote about another case in which a company continued to read the personal email of a fired employee, because he had left his personal online email account logged in from the company-owned laptop. While that seems different, is it really that big a leap from data stored on the local hard drive, to data stored on a remote hard drive, accessed via a web browser? It does, however, start to become a much trickier question, especially as more data and apps move from the local laptop into the "cloud" and as work and life boundaries blur.

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Why Does Facebook Block Any Mention Of BugMeNot?

Michael Masnick — Fri, 5 Sep 2008 15:58:00 PST

Remember back about four years ago when all sorts of online publishers relied on bogus registrations and freaked out about services like BugMeNot that required registration? Over the past few years, BugMeNot has become a lot less essential, because a lot of publications have been getting rid of registration walls or at least providing real value for registering, rather than just forcing you to input bogus info. However, apparently the folks over at Facebook are so against the concept of BugMeNot they won't even let you mention it (via Slashdot. Apparently, if you mention BugMeNot.com in your status message, Facebook warns you that the "message contains blocked content." I guess that's what you get for relying on a messaging system controlled by someone else, but it still seems like a bizarre thing for Facebook to block.

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So Much Hate For Microsoft's Seinfeld/Gates Buddy Ad

Michael Masnick — Fri, 5 Sep 2008 14:44:00 PST

I wasn't going to comment on Microsoft's new ad campaign featuring Jerry Seinfeld and Bill Gates buddying around, but the response among the press and bloggers is almost universally negative -- often in extreme ways, and I don't get why there's such a virulent negative reaction. Just a few examples:

And that's just a quick sampling that I grabbed in a few seconds. It goes on and on from there. To be honest, I'm not sure I get this massive negative reaction. The ad itself is a little silly and barely mentions Microsoft at all, but isn't that bad at all. And, to be perfectly frank, you have to think that Microsoft is thrilled with the reaction. It's gotten a ton more people talking about the campaign than any normal ad program, and it actually does a bit to humanize Bill Gates. And, it fits in with what we've been discussing about how advertising needs to be content first and advertising later.

Also, I'm a bit surprised that none of the commentators seem to be comparing this to the very similar efforts that American Express did four years ago also with Jerry Seinfeld. They created a series of "shorts" somewhat similar to the Seinfeld/Gates episode, and people enjoyed them. Is it just because it involves Microsoft that people react so negatively? Already Microsoft has been able to draw people into the storyline (even if negatively), and it can now use future episodes to continue to entertain and educate. That seems like a good thing, not something to be so widely trashed.

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If ESPN Can Replay Games With Madden '09, Let Us Do It Too

Dennis Yang — Fri, 5 Sep 2008 13:23:00 PST

In an effort to become more relevant to a new generation of football fans, this Sunday on "NFL Countdown," ESPN anchors will interact with simulated football players created using EA's video game technology. Using Madden '09, ESPN's football analysts can model different variations of plays to demonstrate possible outcomes. So, instead of just drawing X's and O's on a telestrator, ESPN anchors will be able to interact with the virtual players on camera to illustrate various football strategies and outcomes. ESPN and EA forged a 15-year partnership back in 2005, and this move strengthens both brand's ties with their audiences.

As the video game has improved, using Madden to illustrate plays has been done increasingly over the past few years, but football spectating still has to cross the chasm of interactivity when compared to the video game experience. In the video game, you're able to change camera angles, slow down the cameras, and highlight things like passing routes and defensive coverages -- all at the click of a few buttons. EA's new system, EA Sports Virtual Playbook, loads in actual gameplay data from the previous day's game, with which ESPN's anchors can then replay and modify the simulation to become the ultimate version of a Monday morning quarterback. That's great and all, it would be even better to let fans download that data to their Xboxes, do their own analysis and then share that back with the community. Though, that scenario is most likely a pipe dream, considering that the NFL still freaks out about even sharing more than 45-seconds of game footage.

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Prisons Upset That Prisoners Don't Get Discounts On Digital TV Converters

Michael Masnick — Fri, 5 Sep 2008 11:59:00 PST

As you probably have heard, the US will be shutting down analog TV broadcasts early next year, as the conversion to digital is complete. For most TV watchers, this won't matter one bit. For anyone who watches TV via cable or satellite TV, the change means nothing. It only impacts those who watch TV-over-the-air and who don't have a digitally-enabled TV or conversion box. So, as part of the effort to move the transition along smoothly, the gov't is handing out coupons to individuals that can be used to pay for a converter box.

Except, apparently, if you happen to live in prison.

Prison officials are getting quite worried that prisons that use over-the-air TV signals for their televisions won't be able to afford the converters, because the gov't won't give them the coupons. As South Carolina Corrections Department Director Jon Ozmint notes:

"We asked them for the coupons and they said they're only available for households. I said, 'We're the big house.' But they didn't buy it."

Now, many might point out that this shouldn't be a big deal, as perhaps the gov't shouldn't be using taxpayer money to subsidize the TV watching habits of prisoners, but the prison officials are claiming that most people don't understand just how important television is in keeping the peace within prisons. The article includes some quotes from folks that suggest that television is a pretty important part of the prison experience in encouraging good behavior and keeping the prisoners connected to the outside world. Who would have ever thought that the conversion from analog to digital TV might lead to prison riots?

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Scammers Copying Big Copyright Extortion Tactics

Michael Masnick — Fri, 5 Sep 2008 10:31:49 PST

It really was only a matter of time. For a while now, the entertainment industry has been using borderline extortion tactics with "pre-settlement" letters that promise individuals they won't get sued if only they pay a fee upfront -- ranging from a few hundred dollars to a few thousand. These letters have proven to be incredibly effective in getting people to simply pay up, so it's no surprise that other scammers have started copying the technique as well. Right now it sounds like they're simply calling people, but it's really only a matter of time until they start sending nearly identical "pre-settlement" letters on threatening letterhead, and getting folks to pay up as well. Of course, given the extremely flimsy nature of the evidence often used by the entertainment industry in sending out those letters, we'll once again note the very fine line between what these supposedly legitimate companies are doing and the out-and-out scammers are doing.

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Heart Demanding McCain Campaign Stop Using Its Song

Michael Masnick — Fri, 5 Sep 2008 09:11:00 PST

Last month it was singer Jackson Browne suing the McCain campaign for using his song in a commercial. As we noted at the time, since it was used in a commercial, it was most likely infringing, but if McCain wanted to use it at an event, he could as long as he paid the proper performance licensing fees. So, now we have another situation where exactly that scenario has happened. At the Republican National Convention earlier this week, the speakers played the Heart song "Barracuda" for VP candidate Sarah Palin (who apparently went by the nickname "Sarah Barracuda"). This is perfectly legal, assuming that the RNC has paid the required performance license, and there's no reason to think they didn't, given how much music was used at the convention.

But, that's apparently not good enough for the band, who complained and had its label, Sony BMG, and its publisher Universal Music Publishing send cease-and-desist letters to the campaign. On what legal basis? They don't seem to have an answer for that. The whole thing is kind of silly. There's almost certainly no legal leg to stand on here, but it's surprising that the RNC wouldn't check first, given how others, like Browne, have reacted and the fact that the press would almost certainly cover the story (as they are). So, while there may be no legal basis for the complaints, it still is surprising that the RNC and/or the McCain/Palin campaign wouldn't bother to first check with the band to see if the members would be upset about the usage.

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Michael Moore Embraces Free Distribution Of Latest Movie

Michael Masnick — Fri, 5 Sep 2008 07:34:00 PST

No matter what you think of controversial film maker Michael Moore (and I'll admit that I'm not a fan -- I think he's entertaining, but plays way too loose with the facts, even on issues where I might agree with him), over the years this been this odd compulsion by pro-copyright folks to pigeonhole Moore as being against anyone sharing his films online -- despite the fact he's clearly stated he has no problem with people file sharing his movies if it means more people see them. Yet, as we've pointed out, others have claimed that Moore's worst "nightmare" came true when one of his movies was leaked online, despite the fact that the leak helped get it more attention (just as Moore wanted) making the movie quite profitable. Then there was the "legal group" that used one of Moore's films as an example of filmmakers hurt by file sharing -- again ignoring Moore's stated appreciation of fans sharing his movies.

Well, now he's making his stance even clearer. He's releasing his latest movie for free online, though, oddly it will only be officially available that way for three weeks (though, I'm sure by then it will be widely available in unauthorized forms as well). As of right now, it's a little unclear if the movie will be available for actual download or just streaming, though the website for the movie itself, called Slacker Uprising says that it will be a download. I think he's being a bit disingenuous in claiming that he's not planning to profit from the release, as he's also offering a DVD for sale, which will likely do quite well. Either way, perhaps now folks will stop using the leaks of his movies as evidence that he's against free distribution of his movies.

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Judge Not Ready To Dismiss Lori Drew Case

Michael Masnick — Fri, 5 Sep 2008 05:10:37 PST

We've made it clear that we feel the criminal charges filed against Lori Drew for her participation in creating a fake persona on MySpace, which eventually resulted in the suicide of Megan Meier, a teenaged ex-friend of Drew's daughter is highly questionable. It is not against the law to be a jerk online -- and many people seem to be reacting emotionally rather than rationally to the facts of this case. Drew wasn't trying to make anyone commit suicide, and no one has explained how the lawsuit would be different if the fake "boy" had been a real boy. Since there was no real law broken, prosecutors twisted a computer fraud law in a way that would basically make most internet users felons.

However, while the judge in the case is examining various briefs pointing this out, as well as ones taking the other side, he's not yet ready to dismiss the case, as he rejected two motions to dismiss the case. However, that may change, as he says he wants more time to consider a third motion to dismiss the case, concerning whether or not the case actually states the offense. Assuming he agrees not to dismiss the case, the actual lawsuit will begin early next month.

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The Last Thing A Musician Wants These Days Is To Appear Anti-Fan

Michael Masnick — Fri, 5 Sep 2008 02:38:26 PST

Last week, when we wrote about the FBI's decision to arrest a Guns N' Roses fan who leaked the band's long awaited next album, one of the common responses in the comments was that because GNR had the legal right to do this, it absolutely made sense for the band to have the FBI track down and arrest this guy. While we've pointed it out before, it's worth pointing out again that just because you have the legal right to do something, it doesn't always mean that it makes sense to actually do it.

In the case of GNR, this point is expressed quite clearly by music industry observer Bob Lefsetz, who discusses how badly this whole ordeal is reflecting on GNR:

Fans. They're the hardest thing to acquire. You can buy publicity, you can pay off distributors. There's mutual self-interest. You want to sell and they want to profit. Newspapers don't do stories on acts no one cares about, and television is only interested in stars. But fans are not doing business. There's no financial payoff for being a fan. It's an end-user application. You don't build up your fandom and sell it. You own it. At least until it fades away when the act does something heinous, like stand up to Napster.

That's haunting Metallica nearly a decade out. Metallica was right, but their fans thought they were wrong. And you always want to come out on the side of your fans. Metallica has learned its lesson. But the record labels have not.

And neither, apparently, has GNR. We've discussed in the past how difficult it has been for Metallica to regain the fans it lost as a result of standing up to Napster, and it will be interesting if something similar happens to GNR in this case. Having your biggests fans arrested tends to make people question why they are fans in the first place. It's basically the opposite of the concept of engaging your true fans. These types of actions push them away, and that's never good for business.

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Comcast Appeals FCC's Wrist Slap

Michael Masnick — Thu, 4 Sep 2008 23:48:46 PST

As was widely expected, Comcast has appealed the FCC's ruling concerning its traffic shaping practices -- even though that ruling was a total slap on the wrist that had no real punishment other than a verbal scolding. But, of course, for Comcast, it's a question of principle -- with the principle being that the FCC has no authority over it on this matter (except, of course, when it's politically convenient for Comcast to say otherwise).

While the ruling against Comcast was rather pointless and meaningless, this appeal could create a much more interesting lawsuit, helping to more clearly define the FCC's authority on these issues. Amusingly, despite the effective issues being identical to the question of the FCC's authority over consumer electronics in the broadcast flag debate from four years ago, expect various public interest groups to align on the opposite sides of where they did back during that fight. Apparently, FCC regulation is bad, except when it's in agreement with your opinion.

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IBM Seeks Patent For Biosensor-Based Hiring

Mike Masnick — Thu, 4 Sep 2008 20:39:00 PST

theodp writes "A just-published IBM patent application for Optimizing Utilization of a Donor describes how to monitor 'the somatic (i.e. physical) and affective (i.e. emotional) states of human resources' to determine 'an optimal allocation of the human resources to tasks.' IBM further explains that 'the emotional and physical states may be sensed via non-invasive biosensors.' And what exactly will be measured and sensed? Physical condition can be determined by measuring 'the level of blood sugar, the blood heat, or the like.' And clues to 'a human resource's mood to perform a job with lust, joy or any other emotional condition' can be found by looking at 'changes in autonomic functions, such as, for example, heart rate, blood pressure, respiration, sweating, trembling, and other features like hormonal changes; changes in body temperature; and changes in neural function that are measurable.' So if you want that job with Big Blue, perhaps you better make sure that your Blood Pressure, Pulse, Mood, and Level of Fatigue are as up-to-snuff as your skills. Yikes."

This sounds like the modern equivalent of Taylorism, which never faired all that well in the first place. Effectively, this sounds like simply applying modern technologies to a typical Taylor-like review of a worker.

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HP And Walmart Get Rid Of Laptop Box; Buy The Computer And Get It In A Messenger Bag

Michael Masnick — Thu, 4 Sep 2008 18:08:00 PST

Having bought my fair share of laptops over the years, I've noticed that the packaging has gotten smaller. I remember years ago buying a laptop and receiving a huge box with the actual laptop suspended in a styrofoam suspension system. More recently, I've seen laptops coming in much smaller boxes. However, Wal-Mart and HP have apparently decided to try ditching most of the packaging altogether, and letting you walk out with your new laptop in a messenger bag, rather than a box. Yes, there are still boxes from when the machines are shipped from HP to Wal-Mart, but the company can now fit 3 laptops to a box, significantly reducing packaging and making life easier on customers in the long run.

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Once More, With Feeling: The Internet Isn't At Risk Of Running Out Of Bandwidth

Michael Masnick — Thu, 4 Sep 2008 16:21:00 PST

For years, we've been hearing telco execs, telco lobbyists and politicians screaming over the coming death of the internet due to an "exaflood" of bandwidth, as things like internet video and bittorrent totally overwhelmed the internet infrastructure. There was little proof that this was actually an issue, and plenty of evidence suggesting that ordinary infrastructure upgrades would more than handle all expected growth. And, in the last few months we've been seeing more and more public reports supporting this position. In August alone we saw two separate reports noting that internet growth was actually slowing rather than increasing at an alarming rate.

And now there's a third such report, looking at internet backbone traffic and noting that there's little to worry about:

For the second consecutive year, the rate of underlying international Internet capacity deployment outpaced global Internet traffic growth, leading to lower utilization levels on many Internet backbones. Between 2007 and 2008, average traffic utilization levels decreased from 31 percent to 29 percent while peak utilization fell from 44 percent to 43 percent.

Yet, if you listen to telco lobbyists, execs and politicians, they'd have you believe that over the past couple of years, the growth of BitTorrent and internet video was flooding the networks. Hopefully, with so many reports pointing out the opposite, politicians will finally start pushing back the next time a lobbyist or exec starts claiming that the internet is at risk of running out of bandwidth.

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California: We Charge People To Read Our Laws For The Benefit Of Californians

Michael Masnick — Thu, 4 Sep 2008 14:42:00 PST

Back in April, we wrote about how the state of Oregon was threatening Carl Malamud, an activist who has been working hard for years to get public content more widely available to people online, for daring to publish Oregon's laws online. The state claimed copyright, not over the laws, but over the presentation of the laws, which Malamud had scanned. After the public outcry over this, Oregon backed down, and Malamud has continued his efforts. A bunch of folks have been submitting this Santa Rosa Press Democrat story all about Malamud's efforts, with a specific focus on California -- which similarly claims copyright on the presentation of its laws and standards.

California's defense of trying to limit such a display of the laws seems pretty ridiculous:

"We exercise our copyright to benefit the people of California," said Linda Brown, deputy director of the Office of Administrative Law, which manages the state's laws. "We are obtaining compensation for the people of California."

In other words, we hide the laws you have to obey from you in order to get more money into the state's coffers. That hardly seems like a reasonable rationale for the efforts. Hell, based on that rationale, wouldn't it make sense not to post any speed limit signs? After all, all the speeding tickets from ignorant drivers would help "obtain compensation for the people of California." Besides, as we all should know, the purpose of copyright isn't to "obtain compensation for the people of California" but to encourage the creation of new works. Is copyrighting the presentation of laws helping to create new... laws? That doesn't seem right.

In the meantime, Malamud is just going to keep posting the laws and making them easier than ever for people to actually know what laws they're probably breaking all the time. It sounds as though he's hoping someone will actually take him to court over this, as he's confident that a court would rule in his favor, finally setting an important precedent. Here's hoping that's true. Unfortunately, we've seen too many bad legal rulings on similar issues to feel that comfortable with simply letting a court set the precedent.

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Citibank Had A Program To Take Money From Customers?

Michael Masnick — Thu, 4 Sep 2008 13:16:00 PST

A few years back, that I accidentally added an extra zero to a bill I paid for phone service. The company automatically credited the account, and a quick call got them to send a check with the overpaid amount. I know others who have accidentally paid a bill twice, or simply overpaid a bill because they didn't have the exact amount of the bill handy and wasn't able to look up the specifics. In most cases, the companies in question would just credit the difference. However, it turns out that Citibank had a different idea. It apparently decided that if you overpaid a bill, you really were just donating free money to Citibank executives' bonus fund. The company actually had a "sweeping" software that would scan customer accounts for a positive credit and simply wipe it off their account, transferring the money to Citibank's general account. This wasn't just a small thing either -- it went on for more than a decade, and the whistleblower who brought it up was fired. And, if you thought I was joking about the executive bonus fund, an executive from Citibank told investigators: "the sweep program could not be stopped because it would reduce the executive bonus pool." Of course, now the state of California has "convinced" Citibank to pay back all that money, plus some interest.

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Palm Beach County Lost 3,400 Votes; Claims Different Sequoia Scanners Count Differently

Michael Masnick — Thu, 4 Sep 2008 11:48:00 PST

For all the trouble surrounding e-voting, some folks believe that optical scan technologies that simply count the paper ballot votes are a decent solution. Of course, those optical scan technologies are often made by the same companies that make the e-voting equipment, and have been shown to have numerous problems going back many years. And, as per usual with these e-voting companies, they've been highly resistant to independent inspection of the systems. Perhaps that's because the machines can't do the one thing they're supposed to do properly: count the votes.

Down in Palm Beach County, Florida (yes, the home of the infamous 2000 election year "butterfly ballot" with its hanging chads), officials are admitting that they've somehow lost about 3,400 ballots. But they don't seem to be saying they physically lost the ballots -- they're saying that the optical scan machines, provided by Sequoia Voting Systems (no stranger to e-voting counting problems) count the ballots differently when the same ballots are run through different machines. In trying to explain how come a "recount" showed 3,400 fewer ballots than the original count, a county official explained:

The seven high-speed tabulating machines used in the recount are much more "unforgiving" than those that process votes on election day

Does that not seem highly problematic to people? Isn't part of the point of these optical scan machines that they'll count the ballots consistently? If everyone seems to admit that there's an element of near total randomness (chalked up to how "unforgiving" the machines are) in these machines, isn't that reason enough to question their usage at all? As for the election in question, it appears that officials have decided to throw up their hands at the controversy and certify the election, despite the fact that this "unforgiving" recount changed the results of the election. Update: Well, now officials are claiming that it wasn't a technology problem but that they simply didn't feed ballots into the machine. That's not particularly comforting either -- and it's still troublesome that they would suggest that machines would count the votes differently in the first place.

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Lars Ulrich On Metallica's Latest Album Being Leaked Online: It's Fine, We're Happy

Michael Masnick — Thu, 4 Sep 2008 10:26:00 PST

We've noted that Metallica has basically spent nearly the last decade trying to recover from the damaged reputation the band brought on itself when drummer Lars Ulrich freaked out about Napster and started suing. While the band has been trying to become more online friendly with its latest album release, you still had to wonder how Ulrich would react to the album being leaked online before the official release date. Some might assume he'd pull a Guns N' Roses and try to send the FBI after the leakers -- but, instead it looks like Ulrich has learned at least part of the lesson: don't freak out at your fans for music getting online, even before the official release. In fact, he seems almost mellow about the leak:

"It's 2008 and it's part of how it is these days, so it's fine. We're happy."

It's tough to tell if he's legitimately "happy" about these fans, or if he's just learned enough to grin and bear it for the time being -- but it's nice to see that he's at least learned something since the Napster debacle.

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