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Record Label-YouTube Deals: One Step Closer to Blanket Licensing for P2P?

Lost in the GooTube shuffle last week was some even bigger news for the scores of YouTube users who already enjoyed lip syncing (and hip shaking) to their favorite songs and posting home videos to the site. Deals worked out with Sony BMG, Universal, and Warner Music suggest that fans will be able to freely remix and share popular sound recordings from those major record labels’ catalogs. When a remix video gets viewed, YouTube will share a cut of the advertising revenue with the rights holder.

It’s a simple concept with potentially profound implications. Artists get paid, while fans can keep on sharing remixed tunes on the site and push the boundaries of user generated media even further. No fans or innovators get sued in the process.

That raises an important question: why can’t P2P users get a similar deal? EFF has long advocated that the music industry blanket license P2P users to let them keep sharing in a way that gets artists paid. The labels could help Internet users get legal by cutting a deal with an intermediary, whether a P2P company, an ISP, or a collective licensing society like ASCAP.

Cyberscholar Michael Geist points this up in an insightful article:

“During the height of Napster, experts estimated that even a five-dollar monthly fee would have generated billions in additional revenue for the content industries, yet those companies chose instead to sue the P2P services along with thousands of their users. The YouTube deal may foreshadow a reversal, with the industry at long last ready to embrace the remarkable commercial potential of the Internet.”

Read the whole thing, as well as Wired’s Eliot van Buskirk hitting on the same notion.

(Cross-posted at DeepLinks)

Could Online Poker Law Raise The Stakes on Free Linking?

The Unlawful Internet Gambling Enforcement Act rocked the online casino industry mere days after its passage this month, and, with the president expected to sign the bill on Friday, most commentary has focused on how it will impact the millions of Americans who enjoy playing poker and placing bets online. As in many other instances, this attempt to stamp out an online activity could also impact anyone who wants to link to or help you access sites online.

Blocking unlawful gambling-related activities shouldn’t mean censoring people who simply reference the existence of gambling sites. Linking, like publishing a phone number or street address, is a form of expression protected by the First Amendment, and this bill raises some subtle free speech concerns.

Instead of changing how federal law treats the individuals who place bets, this bill prohibits businesses from receiving certain types of wagers and puts restrictions on financial service providers, like banks and PayPal, that help transfer money to gambling sites.

In so doing, the bill also singles out “interactive computer services” (ICS) like ISPs or website hosting services and then defines what a court can force them to do under this law. So long as an ICS is not running an unlawful gambling site itself, a court can at most require the service provider to remove hyperlinks or block access to sites hosted on their servers. The bill states that ICSs need not any take action before receiving proper notice from federal or state Attorneys General, and they’re under no obligation to actively monitor their systems.

That’s a good start, but the door to such legal responsibility could have been more firmly shut. The law has often recognized that Internet intermediaries and users shouldn’t be held to account for someone else’s bad deeds, and this bill could have made that crystal clear with respect to gambling-related activities. Absent other acts that are themselves violations of the law, those who merely link to or host someone else’s content shouldn’t be responsible for that site’s activity. You shouldn’t have to check with a lawyer any time you simply want to point people to someone else’s site.

Sustaining the Internet’s vibrant, free flow of information depends on appropriately limiting liability for search engines, ISPs, bloggers, and other information-middlemen who help you discover sites and go where you want online. When trying to stop any unlawful online activity via regulation of such middlemen, it’s extremely difficult to ensure that lawful activity is not incidentally blocked in the process.

For instance, despite the DMCA’s “safe harbors” for service providers that host or link to materials that infringe copyright, providers have sometimes censored non-infringing content in order to avoid the possibility of costly copyright lawsuits. Google is currently fending off a lawsuit from porn vendor Perfect 10 alleging that linking amounts to infringement. Meanwhile, the chilling effects on lawful speech would be quite severe if bloggers were responsible for all unlawful speech that other people posted as comments. After receiving even the hint that a link may lead to expensive lawsuits and perhaps liabilty, bloggers would have strong incentives to remove the commenters’ material in order to stay on the safe side of the law. Fortunately, Section 230 of Title 47 offers broad protection for bloggers, bulletin board creators, and other service providers that qualify as ICSs.

The new gambling bill does offer fairly broad protection for services that qualify as ICSs. If an ICS receives proper notice but still refuses to take down a link or block access to an unlawful gambling site, federal or state Attorneys General still can’t get any monetary damages in court. However, for those who don’t qualify as an ICS, this limitation doesn’t apply.

Regardless, this bill shouldn’t be seen as a concession that the acts of linking or hosting can, by themselves, violate the law. That would be a dangerous precedent for regulation of Internet activities far beyond gambling.

Instead, legislators and courts should clarify protections for intermediaries and users who help you locate information online. After all, we don’t send the feds after phone book authors — why should we sick them on the online equivalent?

[10/17 edited slightly]

(Cross-posted at DeepLinks)

Whither Online Poker? PokerStars Says Business to Continue as Usual

Cyberscholar Tom Bell argues that the Unlawful Internet Gambling Act won’t stop most Americans from playing poker and placing bets as they did before. He makes a solid argument, but color me skeptical in light of PartyGaming’s and 888’s massive stock price drops and public statements about blocking US customers. At the very least, investors think the future is highly uncertain, and that will impact the trajectory of online poker and betting.

But here’s one more reason to believe Bell — PokerStars will, at least for the moment, continue business as usual. The way I read it, they’re waiting to see how the financial transaction regs play out, and that will take many months. Stay tuned…

Hat tip: Iggy.

[Updated, 3/13.]

[————-begin promotion——–]
Visit the online Pokerstars review found at

Disclosure: the listing above is promotional in nature. I was compensated for posting it, and, though I do not warrant anything about its content, I thought it may be relevant to readers.

[————end promotion———–]

Who Killed TiVoToGo?

It’s the latest digital media murder mystery: TiVo Series2’s TiVoToGo enabled limited portability of recorded content to PCs and other devices, but the TiVo Series3 HD did not include this feature when recently released. In other words, if you want to upgrade to HD, you have to downgrade your TiVo’s features.

You don’t need to be Sherlock Holmes to guess that this story somehow involves Hollywood, the FCC, and “digital rights management” (DRM) restrictions. EFF has opposed these restrictions every step of the way, and, in an EFF white paper released today, we’ll explain digital cable DRM’s sordid history, how digital cable and satellite DRM may affect you, and what you can do to fight back.

In short, get ready for copying limits on cable and satellite content that won’t stop “Internet piracy” but will stop you from making legitimate use of lawfully acquired content. You’ll be forced to only buy devices with limited features, and restricted digital outputs could break compatibility with your current HD displays and receivers, even though you may have already invested thousands of dollars in them. Innovators will have to beg permission before inventing new digital devices that help you get more from your satellite and cable content.

Unfortunately, TiVoToGo’s disappearance is just the tip of the iceberg. But you can still take steps to fight back — use EFF’s Action Center to stop cable providers from making DRM even worse, and check out the other action items on our cable and satellite DRM page.

(Cross-posted at EFF’s DeepLinks)

Congress Sneaks Through Online Gambling Restrictions

Last week, Congress dead-locked on many dangerous surveillance, IP, and other cyberlaw-related bills. But they did manage to sneak a new online gambling ban [PDF] into the port security bill — it’s an embarrassing, disappointing instance of our country throwing its weight around online, crippling a burgeoning industry and taking away a favorite hobby of millions of ordinary Americans.

For those who needed a wake-up call that the Internet is indeed regulable, this ought to do it.  Sure, some people will be able to work around the regs, but many won’t, particularly in the near term. Three days after the bill passed, the stock prices of major online gaming companies crashed, and major companies like Party Gaming and 888 vowed to ban all US customers.

The online gaming business is still rather young, yet it was already roughly as big as the US record industry — around 12 billion dollars in yearly revenue. While the gaming industry was cut off at the knees, online payment companies like Neteller also took a nose dive.

The bill doesn’t impact all gambling — it exempts fantasy sports, lotteries, horse racing, and purely intrastate gambling. Domestic gaming companies were either indifferent to the bill or happy to be rid of foreign competitors. The US has ignored WTO rulings against this protectionism before, and it could very well do so again.

But forget about the companies — what about the ordinary people that Congress is ostensibly trying to “save?” What evidence is there that “we’re addicted to online poker as a people?” Addiction implies disease.

Let me make my bias here clear: I play online poker for about 5 hours a month and head to Vegas with friends to play about twice a year. I make a tiny — but, for me, quite significant — amount of spending money that way. And I have a ton of fun doing it. My poker blog is now defunct, but it should give you a sense of how much and why I love this hobby.

Sample my blogroll, and you’ll find many others like me. Some have even made their whole income from playing poker — it’s their livelihoods.

Like the many people who flock to local cardrooms, Vegas, and Atlantic City every year, most online players don’t win money, but they do have a lot of fun. The Internet brought to the fore ordinary Americans’ desire to play poker — it’s no coincidence that poker on TV has grown in parallel, and, at least in California, local cardrooms are sprouting up.

And, yes, some people do get addicted. My point is not to marshall a complete argument against this paternalist policy-making in general or this policy in particular, as distasteful as I find both to be. Rather, I want to highlight that there are millions of ordinary Americans just like me who didn’t ask for this ban, oppose it, and will be harmed by it. The industry invited regulation and taxation, and yet poker players are now facing an outright ban.

Congress completely sold us out — if you care about this issue, head over to the Poker Players Alliance site.

[Note: as usual, this blog represents my views, and not those of my employers past or present.]

Grokster Remand Decision Ain’t Pretty

The Grokster remand decision.

Fred von Lohmann: “More Bad News for Innovators” (See also EFF’s posts on the decision from last summer, starting here.)

Bill Patry’s analysis.

What Does it Mean To Be an “Owner” or “Mere Possessor” Under 17 USC 109?

In light of my last posts about first sale as applied to copies “rented” through Rhapsody, I’ve had an interesting exchange about what it means to be an “owner of a copy” in terms of 17 USC 109 (the “first sale” doctrine), and what rights you have to a lawfully made copy you rent from Blockbuster or Rhapsody. My thoughts are admittedly rough — does anyone else have a clearer answer?  Regardless, thanks to my interlocutor, “analoghole,” for some old-fashioned copyright geekery.

Disney-Owned Label To Sell Full Jesse McCartney Album in MP3

Two months ago, Sony released the new Jessica Simpson single in MP3 through Yahoo! Music. This week, Variety (via PaidContent) reports that Disney-owned Hollywood Records will release Jesse McCartney’s full album in MP3. It seems that some major record label execs may finally be coming to their senses:

“We’re trying to be realistic,” said Ken Bunt, senior VP of marketing at Hollywood Records. “Jesse’s single is already online and we haven’t put it out. Piracy happens regardless of what we do. So we’re going to see how Jesse’s album goes (as an MP3) and then decide on others going forward.”

Kudos to Yahoo! for making progress on this front, even if this is just a baby step in the right direction by the major record labels. DRM won’t stop or even meaningfully slow “Internet piracy.” And after years of pushing for improved compatibility with DRM formats, the record labels have witnessed more, not less, balkanization of music services and devices. If the record labels really care about making sure their customers can play music on the devices of their choice, the only solution that plays-for-sure is an open, unencrypted format like MP3.

(Cross-posted at DeepLinks)

(Fake Headline, Serious Point:) Movie Studios, Blockbuster File Copyright Infringement Suit Against Customer For Failing to Return DVD Rentals

That’s obviously not true, but from the way people talk about Rhapsody and other music “rental” services, they believe that the story could happen, at least in principle.  This is part of yet another misunderstanding about how the DMCA reworked the nature of copyright.

Too often, people confuse defenses of DRM+DMCA based on their ability to prevent *infringing* uses and defenses based on protection of new business models predicated on preventing *non-infringing* uses. The former defense is about protecting copyright holder’s exclusive rights, the latter is in effect about expanding those rights. These days, this confusion typically involves online music rental subscription services like Rhapsody.

The DRM on Rhapsody songs can (in theory) prevent some infringing uses. But Title 17 grants the copyright holder several exclusive rights in 17 USC 106 (e.g., copying, distribution, public performance), and keeping songs after your subscription ends doesn’t infringe any of them. When the DRM prevents you from listening to the song, it’s limiting a private performance. The copy you downloaded was lawfully made, and you’re entitled to make fair use [*1]; to the extent the uses would be protected with a purchased copy, you can move this “rented” copy to a portable player or make a back-up copy of it [*1], for instance.

At first, this might seem strange to some, but consider a DVD you rent from Blockbuster. If you fail to return the movie, can the copyright holder or Blockbuster sue you for copyright infringement? No, they can’t; you can keep watching that movie for as long as you like. Put aside DRM+DMCA and focus on 17 USC 106 for the moment — if you rip a copy to your computer, it’s a fair use just like ripping a DVD you bought at Wal-Mart; to the extent that the latter is non-infringing, so is the former. The copyright holder could argue that this ripped copy of the rental threatens the market for the work and thus is not a fair use, but ripping the purchased DVD threatens the market in much the same way; after all, if you can rip your purchased DVD, then it threatens the market by making it harder for them to sell you a second copy for use on your computer or your portable player. [*1] You can apply the same reasoning to rented or purchased VHS.

To be clear, you could be violating your contract with Blockbuster. And services like Rhapsody could sue you for violating their Terms of Service. In principle, they could get an injunction and actual damages.

However, you aren’t infringing under 17 USC 106 and thus copyright holders couldn’t get statutory damages on that basis. The DRM and DMCA don’t change this analysis [*2], strictly speaking. If you use FairUse4WM to unwrap your Rhapsody WM DRMed songs, you may violate their ToS, you may violate the DMCA (17 USC 1201) and have to pay statutory damages, but you are not infringing (17 USC 106). The public is still technically entitled to fair use, first sale, and all your other rights under copyright, but in exercising them you might violate the DMCA.

So this suggests one way the distinction matters (the DMCA radically changes the available remedies), but there’s a bigger issue here. In reality, the people who support the DMCA’s protection of this business model are not supporting the protection of copyright holder’s limited exclusive rights, let alone supporting the prevention of “Internet piracy” — they’re supporting in effect an expansion of copyright holder’s rights.  The DMCA gives copyright holder’s essentially a broad, exclusive right to control any uses of the work and compatible devices.

Some people may still argue that we need the DRM+DMCA because it protects Rhapsody’s business model and thus this expansion of rights is a good thing. You return your rented DVDs not because Blockbuster will sue you, but because they’ll cut you off from renting again. Rhapsody has no similar threat to hang over your head, so you could download the entire catalog and unsubscribe.

I would dispute that the subscription models would go away for this reason, but let’s assume they wouldn’t offer downloads any more. The endangerment of a business model, by itself, is not a sufficient reason to extend the scope of copyright holder’s rights. Title 17 entitles copyright holders to certain rights, not to certain business models. There are a lot of old and new business models copyright holders would love to protect. For instance, the movie and television studios’ business models were ostensibly threatened by time-shifting, and they’d love to be able to limit it in many ways today in order to enable new revenue models. But that wasn’t and isn’t a sufficient reason to block time-shifting and creation of compatible devices via the DMCA, or to mandate DRM a la the broadcast flag.

A more valid argument here would be that the public benefits by protecting the rental model. Again, I would dispute that the DMCA+DRM really provides a lot of public benefit there. But, regardless, I think most would agree that there are many endangered business models that don’t need protecting. I think many dislike how protection of the rental model also involves inhibiting innovation and competition in the development of compatible music devices. I think many would agree that prohibiting time-shifting and backing-up of purchased media doesn’t benefit the public, even if it enables some new business models. And I bet there are many more ill-effects of the DMCA that they would disapprove of , as well.

On that basis, I think that even those who laud the DRM+DMCA’s role in protecting rental models would be, on the whole, unhappy with the DMCA. To be sure, there are those who like the DMCA because it acts as a general right to control use of copyrighted works and creation of compatible devices; they laud price discrimination and platform monopolies predicated on restricting non-infringing uses. But I think many don’t share that view, particularly when they see that those models aren’t about stopping infringement, let alone “Internet piracy.”

[*1 – Update: Initially, I also stuck first sale in here.  We’ve had an interesting back-and-forth
in the comments about how I may be wrong that first sale would actually apply to the DVD or to your hard drive with the Rhapsody file on it. Indeed, a court might actually view giving away your hard drive with the song as protected by first sale, but giving the away the DVD wouldn’t be, since you can keep a permanent copy of the WMA file and don’t have to return it, but you were just borrowing the DVD that perhaps Blockbuster itself had acquired under a revenue-sharing license agreement rather than as an outright purchase. Thanks
to my interlocutor, “analoghole” The possible problem there doesn’t affect my fair use analysis, however. Note that it also doesn’t change my point that you’re still entitled to first sale to the extent you were with a DRM-free, rented copy. Finally, since people are really getting up in arms about a person being able to keep the songs and use them past the subscription (that’s the biz model at stake), I figured I’d just pull the first sale analysis out, for clarity’s sake.]

[*2 – Update: see a minor clarification in the comments on this. If a copy is *only* non-infringing because of some implied or express license from the copyright owner that vanishes when you circumvent, then that could change the analysis.]

Zune-PlaysForSure Reax: “This Can’t Be True.”

Skim the Digg commentary and you’ll find many users who can’t believe that Zune won’t Play For Sure. It’s so bizarre, they assume the report is inaccurate, despite citations to numerous press reports and MS’ own release. Even CrunchGear refused to believe it. I think most media reports were so confused, that they didn’t report on it — better to avoid the subject altogether than to write an erroneous report. (That, and the media got spun hard on the wireless sharing feature.)

To be fair, I was pretty shocked too. Sure, I can understand the possible business rationale, but the simple fact remains: Microsoft developed a player that can’t play protected Windows Media content from all services providers except the Zune Marketplace. Hell, that even includes the MSN Music Store. On its face, that just doesn’t seem to make sense — until it was official, I couldn’t believe any of the rumors.

Kudos to Wired’s Eliot Van Buskirk who did report this early and often, before the official Zune announcement this week.

Speculation – Why Did Microsoft Design Zune So Protected WM Doesn’t Play?

Below I’ve talked about the what, now for the why. Microsoft’s J Allard can do a lot of hand-waving about Plays For Sure and Zune being two complementary solutions. Or perhaps you think that Microsoft is trying to run competitors out of the market and take Apple head-on with a similar integrated, vertical DRMed platform; perhaps they want the sort of anti-competitive power people ascribe to Apple’s iPod-iTunes tie; perhaps Microsoft was tired of its Plays For Sure licensees failing to attract many customers and wanted to take the wheel. Or maybe some mix of those.

But let me throw one more possible rationale out there: because Microsoft’s “Plays For Sure” WM DRM does not accomodate the Zune sharing feature (and that’s just my speculation), they ditched it. In other words, WM DRM failed to accomodate new, emerging, and potentially unforeseen lawful uses. The end result is that Microsoft decided to force customers to rebuy their preexisting WM DRMed collections in order to make use of Zune’s novel features.

Microsoft wants Zune to be just like iPod-iTunes.  They want customers to know exactly where to go to buy music, what software to use to manage their collection, and what the device will do. It’s a fully integrated platform.  Having customers buy Napster
2.0 music, load it onto the Zune, and then find out that the Zune would
play but not wirelessly stream it would have been a disaster.
It’s exactly the frustration they’re trying to avoid. 

And that’s to say nothing of the fact that many users were already having a lot of problems with WM DRM.  Janus DRM licenses would expire randomly and it wouldn’t sync with devices right for many users.  By starting fresh with Zune, they also avoid that frustration.

However, just like Apple, Microsoft is discounting the frustration of people who want to use an alternative music vendor. Those customers who have bought PlaysForSure WMA files will certainly be confused when their Microsoft player is incompatible. Microsoft is also discounting that many customers will simply opt out of the
licensed services altogether, because they can’t trust their investment
in DRMed media. At the same time, it’s betting that the integrated platform will be worthwhile given the fact that most people’s collections are MP3s anyway.  Most people don’t own a lot of PlaysForSure files, and, just like with the iPod and iTunes, most Zune songs won’t come from the Zune Marketplace.

I still think this won’t be a winning business strategy, at least not in the short run; it’s not going to turn people away from the iPod (not this incarnation).  But, so long as they’re using DRM at all, one can make the argument that it’s a better business strategy for Microsoft than Plays for Sure. Both may be losing strategies, but Zune might be less of a loser.

Regardless, I think these DRMed services under the DMCA are a raw deal for users. These are the sorts of bizarre business decisions made in the DMCA+DRM world. But for the DMCA, this wouldn’t even be an issue.

[Updated a few times today for clarification and additions]

Microsoft’s Zune Won’t Play Protected Windows Media

In yesterday’s announcement of the new Zune media player and Zune Marketplace, Microsoft (and many press reports) glossed over a remarkable misfeature that should demonstrate once and for all how DRM and the DMCA harm legitimate customers.

Microsoft’s Zune will not play protected Windows Media Audio and Video purchased or “rented” from Napster 2.0, Rhapsody, Yahoo! Unlimited, Movielink, Cinemanow, or any other online media service. That’s right — the media that Microsoft promised would Play For Sure doesn’t even play on Microsoft’s own device. Buried in footnote 4 of its press release, Microsoft clearly states that “Zune software can import audio files in unprotected WMA, MP3, AAC; photos in JPEG; and videos in WMV, MPEG-4, H.264” — protected WMA and WMV (not to mention iTunes DRMed AAC) are conspicuously absent.

This is a stark example of DRM under the DMCA giving customers a raw deal. Buying DRMed media means you’re locked into the limited array of devices that vendors say you can use. You have to rebuy your preexisting DRMed media collection if you want to use it on the Zune. And you’ll have to do that over and over again whenever a new, incompatible device with innovative features blows existing players out of the water. Access to MP3s and non-DRMed formats creates the only bridge between these isolated islands of limited devices.

The real culprit here is the DMCA — but for that bad law, customers could legally convert DRMed files into whatever format they want, and tech creators would be free to reverse engineer the DRM to create compatible devices. Even though those acts have traditionally been and still are non-infringing, the DMCA makes them illegal and stifles fair use, innovation, and competition.

May this be a lesson to those who mistakenly laud certain DRM as “open” and offering customers “freedom of choice” simply because it is widely-licensed. With DRM under the DMCA, nothing truly plays for sure, regardless of whether you’re purchasing from Apple, Microsoft, or anyone else.

Take action now to support DMCA reform and to stop the government from mandating more DRM.

[Postscript: In an interview with Engadget, Microsoft Zune architect J Allard pointed out that Zune has sufficient video format support, in part because there’s “Lots of DVD ripping software out there that encodes to those formats, so the most popular formats out there, whether it’s MPEG-4 or H.264, we’ll support those.” Gee, he isn’t suggesting that his business model benefits from customers using tools like DeCSS or Handbrake to evade the DRM on DVDs, right? Especially since Microsoft is furiously trying to squash the FairUse4WM tool, that would seem rather hypocritical.]

(Cross-posted at DeepLinks)

MS Zune Ad

Is this bird animation awesome? Bad? Awesomely bad?

I’m confused.

How Is The FairUse4WM Patch Being Delivered?

Bruce Schneier suggested that it was folded into Patch Tuesday security patches, but he didn’t cite a source.  I have a Windows XP box, and these are the updates I was sent this week. None of them appear to be Windows Media related. Are the updates coming through Windows Media Player, and not the normal Windows Update process itself?  Perhaps my version of Windows Media Player is one of the versions they couldn’t patch for? Are systems like Napster 2.0 pushing out the patch (Rhapsody didn’t push me an update)? Or is there something else going on here? Or is the patch being sneaked in with these unrelated security updates?

If anyone has determined exactly how the patch is being pushed out (and why FairUseWM 1.2 could apparently get around it), I would be interested to know.

FairUse4WM Fixed, Evades Microsoft Patch

That’s what Engadget reports (via Schneier) — let the games continue.

Saturday, 9:25 AM: MS has appararently patched for this tool, and Engadget has the MS internal letter.

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