Managing Rights Management

Warner Music Hires Jim Griffin To Herd Music Industry "Cats"

Sam Gustin reports on Conde Naste's Portfolio.com site that Warner Music's head honcho Edgar Bronfman, Jr. has hired noted music industry exec Jim Griffin, formerly Geffen Music's digital chief, to lead Warner's drive to fix the music industry's business model. Griffin will reportedly focus on getting the ISPs to add an amount to their subscriber fees that would underwrite access to all music tracks. An organization would be created to return fees to labels and artists. Gustin says that Griffin has a three year contract.

Maybe.

It will be interesting to see whether all the interested parties are willing to participate and on what terms. The major and lessor known artists, major and independent labels, royalty collecting societies (such as ASCAP, BMI, and CISAC), concert promoters, venue operators, fan zines and web sites, etc. may  have divergent economic interests. Griffin has a major cat herding effort in front of him.

Comcast Capitulates On Net Neutrality

According to this NYTimes article and other sources, Comcast has said that it will move to application neutral network management and disclose publicly its bandwidth management techniques. Tests by the Associated Press and the Electronic Frontier Foundation (among others) showed that Comcast was disrupting P2P traffic with forged packets.

The company initially veiled its traffic-management system in secrecy, saying openness would allow users to circumvent it. But on Thursday, Werner said the company would ''publish'' the new technique and take into account feedback from the Internet community.

Comcast has been hampering the BitTorrent file-sharing protocol, which together with the eDonkey protocol, accounts for about a third of all Internet traffic, according to figures from Arbor Networks. The vast majority of that is illegal sharing of copyright-protected files, but file-sharing is also emerging as a low-cost way of distributing legal content -- in particular, video.

Digimarc Spins Off ID Business

Watermarking vendor Digimarc has announced that it is selling its ID Systems business to L-1 Identity Solutions Inc. The sale leaves Digimarc free to focus its resources on its digital watermarking and licensing business.

“This relationship comes at a particularly opportune time for Digimarc, as we are experiencing an inflection point in adoption and revenue growth for digital watermarking,” said Davis [Bruce Davis, Digimarc Chairman and CEO]. “Our technology is beginning to permeate the full range of media content, from banknotes and secure credentials to television, movies, music, video games, digital images, advertisements, packaging, and industrial goods. This transaction represents a great step forward for our shareholders, employees, and customers. As we combine our ID Systems assets with global leader L-1 to form a more comprehensive offering responsive to our customers’ evolving needs, we are also redoubling our focus on the realization of our founding vision to making digital watermarking a standard feature in all media content. This is a very exciting moment in our history.”

Seems like a wise move.

DirectTV Clamps Down

[I've been off doing a crash project for a client. Catching up today.]

Several sources including this Ars Technica article by Eric Bangeman report that Direct TV has changed the rights management rules regarding the time to view recorded TV shows.

DirecTV DVR owners got some bad news from the satellite TV provider recently when the company announced that it will break some of the existing functionality of the DVRs. Effective April 15, subscribers will only have 24 hours to watch pay-per-view movies recorded to their DVRs. Once the movies are purchased, the clock starts ticking, and after 24 hours, the PPV movie saved to your DVR will become nothing more than an unreadable collection of zeros and ones.

Why the studios should care is beyond me. Another capricious act by content owners and distributors.

Surprise! MPAA Against Net Neutrality

Ya just have to love Variety-speak: "MPAA topper blasts Net neutrality."

"This effort is being called by its proponents 'Net neutrality,'" Glickman [MPAA's 'topper"] continued. "It's a clever name. But at the end of the day, there's nothing neutral about this for our customers or for our ability to make great movies in the future. Government regulation of the Internet would impede our ability to respond to consumers in innovative ways, and it would impair the ability of broadband providers to address the serious and rampant piracy problems occurring over their networks today ... Government regulation of the Internet would be a terrible reversal of American innovation policy."

Unnecessary alarmist misdirection aimed mainly at P2P file sharing, in my view.

Macrovision Sells Digimarc Shares to PE Firm

In an apparent effort to focus in its core businesses, Macrovision has sold an approximately 10% stake in watermarking firm Digimarc to buyer thus far identified only as a Private Equity firm. Previously, Macrovision sold its Trymedia business to RealNetworks for $4M. Also in February, Thoma Cressey Bravo picked up Macrovision's business software unit for $200M.

Ad Blocking Poll To Close 3-15 - Norton Internet Security

Symantec has indicated that it will no longer support the ad removal feature of Norton Internet Security 2008. The poll running in the right hand column will close on the Ides of March, Saturday, March 15th. Please indicate your preferences before then.

Another View of Piracy in the PC Games Space

Loyd Case writes on the ExtremeTech site about rampant piracy in  the PC games space. This longish article is well worth a read.

Among other data, Case offers selective quotes from an article by Michael Fitch on the shutdown of Iron Lore Entertainment, for reasons that include piracy:

Rampant Piracy In the Causal Games Space

Causal games might be defined as games small enough to be downloaded and/or web based (e.g., one of my favs, Desktop Tower Defense). How does piracy affect the causal game business? Over on Gamasutra, Reflexive's director of marketing Russell Carroll has posted a great article asserting that 92% of one game, the full version of Ricochet Infinity, were found to be playing pirated copies. A staggering percentage.

One way to fight the search-engine facilitated piracy is to work to remove the ever-expanding number of links to illegal copies, but in many cases improving the Digital Rights Management (DRM) system to be more secure can be more effective as it renders a large number of those links obsolete. This is tricky to be sure, because improving the security must be done without making the DRM so onerous that it keeps honest customers from purchasing games.

Exactly so.

Digimarc Conference Call - A Few Tidbits

A lot of the call and questions are focused on the ID part of Digimarc's business including watermarking of media content. Here are some tidbits (paraphrased):

Blu-ray win not relevant to Digimarc since Digimarc is involved in both formats other than greater sales in 08. IP connected entertainment devices will be more important. Technology for identifying media objects will become increasingly important. Final Blu-ray license will require Digimarc watermarking. Probably the middle of '09 before royalty revenue from Blu-ray sales become material to Digimarc's financial results.

Nielson relationship going great. We're in the development stage getting solutions ready for market. They will be Nielson's solutions. We're cranking full speed on it.

DRM In Movie and TV Downloads? Wired Says No Way!

Is the movie download business like the record  business and should the lessons learned there be applied to movie and TV program downloads? Yes, says Frank Rose in Wired in an argument that seems a bit illogical:

The lessons from the music fiasco are clear: Trying to limit the inherent advantages of digital files is a losing strategy. The way to stop piracy is to make everything available — easily, legally, and at a fair price. But it's a lot of work to secure Internet rights to old films and TV series from writers, directors, composers, and the like, and the studios show little inclination to monkey around with their lucrative sales to premium channels like HBO — deals that don't affect DVD sales but are written in a way that can keep electronic distribution rights locked up for years. "There would be a lot fewer Mercedes pulling up to the Palm every day without those pay-TV deals," one exec quips. Right — but how many music moguls have you seen pulling up to the Palm lately?

If the music industry failed to monetize because of rampant piracy of a product that was provided on CDs without protection, and if the movie industry more successfully monetized by locking up content for a period of time on many channels, what's wrong with copy protection and DRM?

Wired: BD+ Helped Blu-ray Win The Format War

Wired has a good story on the contribution of BD+ to Blu-ray's besting HD-DVD in the HiDef optical disc format wars.

Sony's victory in the DVD format wars was largely due to its embrace and Toshiba's rejection of a sophisticated anti-copying scheme that promises to be relockable should it be cracked at some point in the future....

Paul Kocher, Cryptography Research's president and chief scientist, thinks HD DVD's decision not to adopt his technology eventually tipped the battle to Blu-ray.

"I don't want to pretend that security was the only thing that drove the content war," Kocher said. "But from a content perspective, I think security is the biggest overhang over the future of the studios and I think they realize that and they are doing what they can to deal with that."

HD-DVD: RIP.

Delaying the Canibalization of The Cable TV Business

One of the high level themes underlying today's FCC hearing on net neutrality is what's motivating Comcast to interfere with P2P traffic? Their answer is that they manage the use of a small number of users whose traffic my otherwise degrade the experience of the many more users who are not doing P2P.

Increasingly, P2P is being used to share or deliver video via the Internet. These video providers are increasingly competing with the Cable TV operators for audience, or in the vernacular, for eyeballs. This morning saw a demo and heard a presentation by Gilles BianRosa, CEO of  Vuze which uses P2P to distribute video programming across the net.

Factoid mentioned this morning: more content is downloaded from YouTube than was distributed across the Internet in 2000.

Verizon offers, for example, 20 megabits per second in each direction on its FiOS network and doesn't discriminate against P2P applications largely because of important architectual differences between FiOS and cable-based broadband networks.

So, why does Comcast interfere with P2P traffic? One possible answer is that they are trying to delay competition with its base Cable TV business.

Morning Session Main Points

This morning's session boiled down to whether Comcast and cable operators can manage their network by discriminating against specific applications such as Bit Torrent. Some argued that such discrimination is OK as long as the application discrimination is disclosed to consumers. Others argued that in a duopoly, disclosure isn't sufficient.  Therefore, Comcast and other, mostly cable ISPs, should be prevented from discrimination against specific apps.

It was also noted that the deep packet inspection technologies apparently being used to interfer with P2P traffic can also be used for content filtering and abridgment of speech not that anyone is doing that in the US.

We're off to the engineering session.

Blogging From The FCC Hearing on Net Neutrality

I'm at the Havard Law School today. Thanks to the Berkman Center for Internet & Society, the FCC is conducting a public en banc hearing at the Harvard Law School on Net Neutrality (NN) and broadband management. There will be a live audo feed for those interested. I'll be blogging comments from time to time.

What's Next for Blu-ray, BD+?

So now that Toshiba has given up on HD-DVD, what's next for Blu-ray, the winning HiDef optical format? This is the question posed by Kelly Rush and posted on HiDefDigest. Rush's prognostications include the suggestion that "BD+ starts getting aggressive:"

Until now, studios haven't been overly-aggressive with pushing this; they haven't even really needed to yet, since BD+ has not been properly cracked. Expect the studios and the Blu-Ray alliance to monitor what happens in the piracy community extremely closely now, and start making aggressive changes, should the need arise. Also, don't be surprised if new updates are added to the specs if it looks like crackers are getting too close to a proper solution for the BD+ protection, that allow the studios to have even tighter control over the DRM (Sony and Blu-Ray have made it clear that they don't mind breaking certain capabilities on older-standard Blu-Ray players as they move forward).

Agreed.

Macrovision Selling Flexnet and InstallShield Software Unit

Macrovision has announced the pending sale of its Business Software Unit to private equity firm Thoma Cressey Bravo. Included in the transaction are Flexnet copy protection solutions and InstallShield.

The transaction will result in a stand-alone company focused on providing solutions that help simplify the business relationship between software producers and enterprises. All products and associated support and services from within the Software Business Unit are part of the transaction. Mark Bishof, currently Macrovision’s Executive Vice President and General Manager of the Software Business Unit, will assume the role of CEO for the stand-alone software company following the close of the transaction.

It would appear that Macrovision is spinning this out to focus on higher margin and/or higher growth opportunities, such as the SPDC/BD+ technologies it acquired from Cryptography Research, Inc. at the end of last year. Macrovision will also be "digesting" the acquisition of Gemstar / TV Guide.

Netflix Chooses Blu-ray Exclusively

Netflix is going exclusively Blu-ray. Momentum seems to be building for Blu-ray and against HD-DVD. Perhaps the end of this optical disc format war is in sight. According to the AP:

Netflix has stocked both formats since they became available in 2006, but said the decision of four of the six major studios to issue films only in Blu-ray format made it likely that the Sony format will prevail.

"From the Netflix perspective, focusing on one format will enable us to create the best experience for subscribers," the company said, adding that not many customers order high-def DVDs.

RIAA: $1.5 Million Per Ripped CD - It Won't Make Any Difference

While I believe that technical means can be useful in reducing piracy (e.g., Blu-ray's BD+ technology acquired late last year by Macrovision), I believe that the RIAA has been using litigation as a way of postponing the day when the major record labels are going to be forced significantly change their fundamental business models.

As reported here earlier, the RIAA has argued that ripping CDs is illegal. Not content to sue individuals for large sums of money, Ars Tecnica reports that the RIAA is now seeking through legislation to create a statutory penalty for ripping a CD that would add up to  $1.5M for a CD with a typical number of tracks.

The change to statutory damages is contained in the PRO-IP Act that is currently up for consideration in Congress. We've reported on the bill before, noting that Google's top copyright lawyer (and the man who wrote a seven-volume treatise on the subject of copyright law), William Patry, called the bill the most "outrageously gluttonous IP bill ever introduced in the US."

I'm reminded of the scene in Aliens when Riply and Newt have the following exchange:

Ripley: These people are here to protect you. They're soldiers.
Newt: It won't make any difference.

Info Commerce 1997: What Were People Thinking About

Over on my scenario planning and business strategy blog, I've been reviewing the results of a public scenario planning workshop on The Future of Information Commerce held in 1997. Readers of this blog might be interested in the results and my commentary. For instance, some of the issues addressed in the workshop included the impact of DRM and business models.

The first blogicle which provides background information and a pointer to the results thanks to the Internet Archive' s Wayback Machine.

The second installment comments on what my former partners took to be the major learnings from the workshop.

The third installment comments on the Conventional Wisdom scenario: the views of the participants as a group at the outset of this 2-day workshop.

Additional installments are forthcoming.

Wired: DRM Dead, Watermarks Rise From The Ashes

David Kravets writes in Wired that watermarking will replace DRM for music. Maybe. Watermarking is something added to the audio that is below the perceptual threshold, i.e., cannot be detected by the listener. Usually the "something" is a code that identifies the track and/or its owner. In some instances, the watermark may indicate who last created the file. Kravets writes:

Reuters - Porn Industry Challenged By Video Sharing Sites

In a Reuters article, Adam Tanner reports that the adult film industry is being hit hard by piracy. Adult rated videos are being distributed by sites such as Xtube, a site for 18+ year olds apparently modeled after youtube.

"We're dealing with rampant piracy, tons of free content," said Steven Hirsch, co-founder of privately held Vivid, the best-known studio making sex films.

Vivid once earned 80 percent of its roughly $100 million a year from DVD sales, but last year that fell to 30 percent, Hirsch said in an interview.

Podcast with Jake Shapiro, Public Radio Exchange (PRX)

In addition to technical solutions for directly managing rights associated with digital assets, I also write occasionally about clearinghouses, rights exchanges, royalty collecting societies, and the like.

I spoke recently with Jake Shapiro, Executive Director of the Public Radio Exchange, a nonprofit service for distribution, peer review, and licensing of radio pieces. Jake is also a Fellow at the Berkman Center for Internet & Society at Harvard Law School and is a member Two Ton Shoe, a band with a large following in the US and South Korea.

We spoke about a broad range of topics relating to public radio and audio programming, independent producers, PRX as market place, their successful efforts to reach young content producers through their "Generation PRX" site and service, and the all important editorial / selection functions performed by publishers, distributors, and exchanges.

The podcast can be accessed here.

A time index to our conversation follows:

RIAA Declares Using Brain to Remember Songs is Criminal Copyright Infringement

[tip o' the hat to Bob Horn] Well, it's only satire, but great satire from NewsTarget.com. Written by Mike Adams, the piece begins:

On the heels of the RIAA's recent decision to criminalize consumers who rip songs from albums they've purchased to their computers (or iPods), the association has now gone one step further and declared that "remembering songs" using your brain is criminal copyright infringement. "The brain is a recording device," explained RIAA president Cary Sherman. "The act of listening is an unauthorized act of copying music to that recording device, and the act of recalling or remembering a song is unauthorized playback."

The RIAA also said it would begin sending letters to tens of millions of consumers thought to be illegally remembering songs, threatening them with lawsuits if they don't settle with the RIAA by paying monetary damages. "We will aggressively pursue all copyright infringement in order to protect our industry," said Sherman.

DRM 3.0 Has Arrived

Following several conversations with senior executives from several different companies, I've come away from the CES show thinking that the next generation of DRM has arrived. The outlines of DRM 3.0 have been clear for the past several months, but two themes emerged from my various discussions.

The first is that despite the apparent death of DRM in the music world, rights management is being reinvented as network layer and backend sets of processes and services. Network providers will increasingly play traffic cops and apply rules such as "don't allow transmission of the copyrighted material" across our network. Similar functions are being developed / applied in the User Generated Content world (UGC).

InformationWeek - Another Apple Anti-trust Law Suit

InformationWeek reports that another anti-trust suit requesting class action status has been filed against Apple. To promote interoperability, part of the suit demands that Apple open its platforms to other DRM standards and media formats. But in all these cases the first order of business is to assert that the company in fact has one or more monopolies:

The complaint against Apple claims that the company controls 75% of the online video market, 83% of the online music market, more than 90% of the hard-drive based music player market, and 70% of the Flash-based music player market.

RIAA Argues Riping CDs Illegal - Institutionalized Stupidity

As readers know, I'm favorably disposed to technical means such as DRM, watermarking, fingerprinting, conditional access, and encryption for protecting digital content provided that the technology is reasonably user friendly and that those who use it to protect content provide full disclosure to consumers.

As reported by Marc Fisher in the Washington Post, the RIAA is arguing in a legal brief in a suit against Jeffrey Howell (and elsewhere) that the mere act of ripping tunes from music CDs and storing those tracks constitutes making illegal copies.

The Howell case was not the first time the industry has argued that making a personal copy from a legally purchased CD is illegal. At the Thomas trial in Minnesota, Sony BMG's chief of litigation, Jennifer Pariser, testified that "when an individual makes a copy of a song for himself, I suppose we can say he stole a song." Copying a song you bought is "a nice way of saying 'steals just one copy,' " she said.

David Pogue: The Generational Divide in Copyright Morality

NYTimes columnist David Pogue asked his college audience about various use scenarios for music and video. Few found any moral or ethical problem with violating copyright. Pogue concluded this piece with:

I don't pretend to know what the solution to the file-sharing issue is. (Although I'm increasingly convinced that copy protection isn't it.)

I do know, though, that the TV, movie and record companies' problems have only just begun. Right now, the customers who can't even *see* why file sharing might be wrong are still young. But 10, 20, 30 years from now, that crowd will be *everybody*. What will happen then?

Defective by Design Targets eBooks

The Defective by Design anti-DRM campaign has targeted eBook readers and books from Amazon and Sony:

• When you purchase a DRM ebook, it is locked to a single device. When the device breaks or becomes outdated, you can no longer read your ebook. You buy a lock, but you don't own the key! If you try to pick the DRM-lock on an ebook so you can read your book on another device, you break US Federal Law (The Digital Millenium Copyright Act).

• DRM ebooks are bad for authors and publishers. The owners of DRM technology get to decide which books, newspapers, and magazines can be put into their DRM formats. The DRM technology owners can deny whomever and whatever they wish from using their format. DRM allows for digital censorship.

So their answer seems to be enable piracy and reduce the revenue of publishers. It's a point of view, to be sure, but not one with which I agree.

 

Comcast P2P Traffic Interference Update

[Tip o' the hat to Dave Farber's IP list] A detailed and useful EFF report on Comcast's use of packet forgery and other techniques to interfere with P2P traffic is here. The report says that  the consequences of packet forgery include:

Comcast's interference is potentially troubling as well to the extent it may hobble potential competitors deploying next-generation video distribution services. BitTorrent Inc., for example, now distributes films under license from Hollywood movie studios and thus competes with Comcast's cable TV products. Similarly, Vuze, which recently filed a petition with the FCC for rule-making regarding Comcast's interference practices, also sells downloads from a huge library of licensed content, using BitTorrent as a distribution mechanism. Other companies and products, such as Joost and Miro, also rely on P2P protocols that are similar to those that are being impeded by Comcast.... [footnote omitted]

Writing on Alternet.org, Annalee Newitz says about Comcast's interference:

Software Freedom Law Center Sues Verizon Over Open Source Software

The Software Freedom Law Center (SFLC) has filed a copyright infringement lawsuit against Verizon  on behalf of the two principal developers of BusyBox, alleging violation of the GPL V2. BusyBox is a lightweight set of standard Unix utilities commonly used in embedded systems and is open source software licensed under GPL version 2.

An Information Week article says that:

The case against Verizon, however, marks the first time SFLC has sought to defend the GPL in court against a multibillion dollar industry giant. As such, it could provide a key test of the legal validity of the GPL -- a license that's used by thousands of open source developers. Some companies, includingMicrosoft (NSDQ: MSFT), have said they believe parts of the GPL are not legally enforceable.

Western Digital's Crippleware

Writing in the ChannelRegister (UK), Andrew Orlowski has written a couple of useful articles on the Western Digital's 1 terabyte network drive targeted to the consumer market. The first article describes how WD has crippled the filesharing software it provides so that one cannot share media files across the net. Orlowsk's second article describes earlier attempts to accomplish similar anti-piracy goals

But there may be less here than initially thought, according to Orlowski:

What's "crippled" is Western Digital's optional extra, a virtual file system for Windows users called Mionet. But then it always has been....

Mionet is marketed as a virtual filesystem, and permits you to access your home Windows PC across the internet. It actually does quite a bit more: a shared workspace, and remote device access, for example viewing your webcam remotely. It's a "placeshifting" service, of a kind.

Many of these services are intentionally limited, and this one is no different: Mio blocked shared media over an internet connection long before Western Digital acquired the startup earlier this year.

All these attempts at blanket restrictions--however circumventable--give DRM a bad name. It's one thing to protect movies, television, and music. It's quite another to prevent consumers from sharing their own media files with others and in doing so, add more ammunition to the rising tide of anti-DRM sentiment.

Goldman Sues PirateBay For Lost Royalties On O.J. Simpson Book

The Associated Press reports that Fred Goldman, father of slain Ron Goldman, is suing the Swedish site The Pirate Bay over alleged lost royalties from O.J. Simpson's book, If I Did It: Confessions of the Killer.

Although Goldman's attorneys have sent a letter demanding the Web site's operators stop posting the book, the defendants have indicated "they are not subject to the laws of the United States," the lawsuit said.

The lawsuit seeks to recover profits from the "illegal publication" and suggests The Pirate Bay receive advertising money from such American companies as Wal-Mart, Target, Jamster and The Wall Street Journal.

Monday Nite's Digital Rights Media Debate - What Should the Model Be - 11/26/07

The Digital Media & Telecommunications SIG of the MIT Enterprise Forum held a panel discussion Monday evening, November 26, 2007, on the topic, Digital Rights Media Debate - What Should the Model Be?, . Thanks to the organizers for including me as a speaker. My presentation can be downloaded from here (PDF).

The panel also included noted intellectual property attorney Steve Henry, Wolf Greenfield & Sachs, who provided an overview of basic copyright-related laws as they relate to DRM. Steve was kind enough to provide me with a copy of his slides, which can be downloaded