Law and Information

In May 2005, I reported here about Apple iTunes Music Store’s questionable practice to impose English law on its Norwegian and Swiss consumers and speculated about the enforceability of such a choice-of-law agreement. According to a report by The Register, the Norwegian Consumer Ombudsman now ruled that iTMS breaks the Norwegian consumer protection law and has given the company two weeks to revise its terms of contract. Read more, and more.

Apple recently announced that it has sold 500 million songs from its Tunes Music Store (iTMS) and entered the Japanese online market. The Berkman Center’s Digital Media Project team takes this moment to share some observations on the legal and policy developments in the Post-Grokster World. In a report that I have written with my wonderful colleague Gabriela Ruiz Begue we also look back at analysis presented in our iTunes case study, in which we provided an in-depth analysis of the iTMS service. As always, comments most welcome.

On a personal note: Thanks much, Gabriela, for great collaboration during your summer internship at the Berkman Center. I wish you all the best.

See, for instance, reports here and here.

Find here a terrific report by the OECD on the digital music industry (pre-release.) The report includes, inter alia, references to Terry Fisher’s seminal book Promises to Keep as well as to the Berkman Center’s iTunes case study.

The report concludes that online music distribution will grow significantly over the next few years, will force the music industry to reconsider their business models, and will continue to pose regulatory challenges to governments. The study includes a detailed impact analysis of digital music distribution on artists, consumers, the record industry, and new intermediaries.

The OECD underlines the positive potential of digital distribution, both as a new business model and a cultural phenomenon. It’s report further concludes that Internet-based piracy may be reduced, if licensed file-sharing and new forms of superdistribution evolve.

The study, part of the OECD Project on Digital Broadband Content, is the outcome of work involving a wide range of stakeholders, including many governments. It’s among the first roadmaps exploring as to how public policy should be re-evaluated in this space.

The Berkman Center’s Digital Media Team was invited to comment on a draft version of this report. Today, we congratulate the study’s authors to a thorough multi-stakeholder analysis, written in a challenging environment.

Stay tuned.

Update: The OECD report is also featured in the latest edition of The Economist (subscription required.) See also WIRED News with reactions from IFPI.

My colleague and friend Georg P. Krog at the Norwegian Research Center for Computers and Law, University of Oslo, points out in an inverview with the Norwegian national TV that the newly launched iTunes Music Store Norway terms of service define English law as the law that governs the relationship between Apple’s iTMS and its consumers. The same is true for iTMS Switzerland as it turns out. From a consumer perspective, this might be quite surprising news. Personally, I have some doubts that the particular choice-of-law agreement would be upheld by a Swiss court given the fact that it doesn’t seem to comply with the usual standards we apply to such clauses. In any event, I’m sure that Georg – an expert in jurisdictional issues who has also contributed to our iTunes case study – will have many more comments with regard to this choice-of-law agreement.

Swiss music fans can now also download music from Apple’s iTunes Music Store. Earlier today, I was interviewed (in German) by the Swiss national radio network. Journalist Rainer Borer asked a serie of excellent questions and, among other things, wanted to know whether online music stores are the silver-bullet-solution to the digital media crisis. Given our research here at the Berkman Center (see, e.g., this report), it might not come as a surprise to you that I expressed doubts that business models such as iTMS are the final answer to the much broader phenomenon of fundamental shifts in the way we create, distribute, access and use music in particular and entertainment in general. As always, there would be much more to say… I haven’t had the chance, for instance, to mention the question of iTMS biz model’s sustainability, or to explore important interoperability issues. Interested listeners may get more information from our 2004 case study.

Our colleagues at the Institute for Information Law (IViR) at the University of Amsterdam released, as part of the INDICARE project, an interesting report on Digital Rights Management and Consumer Acceptability. It seeks to provide an overview of the state of the (European) discussion from a multi-disciplinary perspective, and analyzes social, legal, technical, and economic issues.

The report concludes that surprisingly little is know about consumers’ acceptance level of DRM, and what users’ expectations are regarding the use of digital content. The report, inter alia, calls for a better involvement of the consumer side and a joint dialogue between the market players.

The report will be updated. Three pointers to Berkman reports and papers in this context:

* re section 6.5 of the report on alternative business models, see also “Content and Control: Assessing the Impact of Policy Choices on Potential Online Business Modles in the Music and Film Industries.”

* re section 4.2 on the EU-Copyright Directive, see also “Transposing the Copyright Directive: Legal Protection of Technological Measures in EU-Member States,” and the respective Berkman project website.

* re section 4.4 on interoperability, see John Palfrey, Holding Out for an Interoperable DRM Standard, in Christoph Beat Graber, Carlo Govoni, Michael Girsberger, and Mira Nenova (eds.), Digital Rights Management: The End of Collecting Societies? (Forthcoming, April 2005.)

The Berkman Center’s Digital Media Project team has released an in-depth analysis of the impacts of policy choises on emerging business models in the music and film industries. Here’s the link to the paper and the abstract:

The online environment and new digital technologies threaten the viability of the music and film industries’ traditional business models. The industries have responded by seeking government intervention, among other means, to protect their traditional models as well as by developing new models specifically adapted to the online market. Industry activity and public debate have focused on three key policy areas related to copyright holders’ control of content: technical interference with and potential liability of P2P services; copyright infringers’ civil and criminal liability; and legal reinforcement of digital rights management technologies (DRM).

Special thanks — and congratulations — to Derek Slater and Meg Smith of the Berkman team for their work.

Berkman Center’s Executive Director John Palfrey lectured earlier today at Cornell’s University Computer Policy and Law Program. In the first session, he made a strong case why, in fact, it makes sense to teach “cyberlaw” rather than the “law of the horse”. John started with an analysis of three contemporary legal and regulatory issues that are Internet-specific: Spam, the digital media crises, and VoIP. From there, he moved to a more abstract level and discussed some of the basic characteristics – phenomena such as large-scale infringements, uncertainty surrounding the applicability of traditional legal doctrines such as fair use, high costs of enforcement and coordination, and global reach of the medium, among others – which make the law of the Internet (at least in part) different from other areas of law. John also used variations on Lessig’s theme of the four modalities of regulation to illustrate what makes Internet law special.

In the second lecture, John Palfrey offered a thoughtful and comprehensive overview of the current digital media crisis. Starting with the Napster saga, he moved forward to the current state of affairs, discussing from a comparative law perspective, among other things, the Berkman Center’s iTunes case study and recent case law at the intersection of copyright and contract law as well as technological protection measures. Finally, John discussed possible scenarios for the future of digital media.

Both lectures provide a great opportunity to get an expert’s overview where cyberlaw stands and what some of today’s hottest topics are; highly recommended, also to the audience abroad. And even if you are a scholar working in the same field, you’ll enjoy Palfrey’s presentation, since it’s one of the increasingly rare occasions to re-think some of the fundamental assumptions and concepts of cyberlaw. Thanks, John!