logictortured.com Blog

You can’t complain about “lost sales” through piracy when you refuse to sell

You can read the whole background here. A web comic author complained that when he went to buy or pay to watch the TV series Game of Thrones, he was unable to do so. The producers of that show simply do not allow anyone to pay to watch it except on HBO.

To summarize, he was willing to pay to watch the show, but the producer refuses to take his money.

A columnist by the name of Andy Ihnatko wrote that this shows the erroneous sense of entitlement internet users have. “Entitlement” being a derogatory comment, of course. He argues that HBO has no duty to offer its shows in a format to please its audience. And that internet users should simply buy what HBO offers or sit down and shut up.

He’s right. But he’s still wrong. He won the battle but lost the war. Let me explain.

Imagine if a meat-space retailer operated the same way HBO is acting. Imagine if Wal-Mart was only open a few utterly inconvenient hours per week, they had all of these “windows” (aka, timelines) for selling fresh fruit and meat, and sometimes they would simply refuse to even sell fresh fruit or meat. “Sorry, we have the steaks in the Wal-Mart vault.” Analogous to the famous “Disney vault.”

And to make the analogy complete, Wal-Mart would only barely lock their doors. Anyone could walk in anytime they wanted and take whatever they wanted.

Who would the police blame each and every time Wal-Mart called for another robbery? Wal-Mart, of course. And after a while, I’d guess the police would even stop coming.

But in the wonderful world of intellectual property, it’s never the copyright industry’s fault. It’s always the consumer’s fault.

So, Ihnatko is correct. HBO does not have to offer its shows in a format its customers want. However, once HBO refuses to take money from its customers, it no longer can complain about piracy taking away lost sales.

HBO has a solution to piracy: offer a product people are willing to pay for. The sole reason HBO is losing sales is because it’s refusing to sell.

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Copyright Maximalists or Middlemen Protectionists?

Every so often a Copyright Maximalist gets caught violating copyright. For example, France’s President, Nicolas Sarkozy, was accused of violating copyright. SOPA sponsor Lamar Smith has been accused of infringing a photographer’s copyright.

People are outraged by this. They consider it hypocritical. How can someone demand stronger copyright laws, but then ignore the laws currently on the books?! It doesn’t seem to make any sense.

However, it does make sense. Copyright Maximalists don’t give a frick about protecting copyrights. A better term to describe them would be Middlemen Protectionists.

These people don’t give a frick about the rights of some photographer. But they are highly concerned if Viacom or Disney feels their profits are insufficient.

When a powerful status quo corporation, which derives all of its profits collecting government granted monopoly rents, wants government protection, the Middlemen Protectionist are the first to jump up to help. They’ll demand new draconian laws. They’ll gladly dump the first amendment and due process to give their middlemen buddies higher profits.

But if a photographer wants a bowl of gruel to compensate him for his work, the Middlemen Protectionist just lights up another cigar and laughs.

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Is the use of JavaScript required by the DMCA?

I use Firefox with PrefBar installed. I love PrefBar because it allows you to turn off and on JavaScript with a single click. I love surfing with JavaScript turned off because it eliminates nearly everything annoying about web, e.g., no more flash. background music, and pop-ups, etc. When I need JavaScript, like when working on this blog or I want to watch something on youtube, I can quickly turn it back on.

Anyway, I bring this up because apparently you can avoid the New York Time’s new paywall by simply not using JavaScript. Mike over at TechDirt.com asks, Does not using JavaScript violate the DMCA?

It would certainly appear that I’m using a circumvention device to access protected copyrighted materials.

Now if I am violating the DMCA, essentially that means that we’re required by law to surf with JavaScript enabled. You wouldn’t want to be accused of copyright infringement, would you?

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The Copyright Industry Can Compete!

I’ve written before that the copyright industry simply cannot and will not compete in a free market. Whenever competition arises, they’ll sue. If they can’t sue. They’ll have laws enacted to allow them to sue. If they can’t get laws passed, they’ll have treaties passed, which will force new laws to be enacted.

As another example in the pseudo IP realm, D’Addario, which makes guitar strings, also wants government protection from China. He wants the government to act as his own private police force to protect his trademarks.

But one person in the copyright industry has learned that competition is a good thing. She’s the CEO of a company which makes and sells software. When an employee left the company and started selling her own nearly identical version of the software, the CEO’s first instinct was to go legal. She sued. That’s what the copyright industry always does when faced with competition.

But after spending a ton of money with no solution in sight, she decided to drop the legal action and compete. She listened to her customers and made a better product. Her sales are higher as are her profits.

Let’s hope the music and movie industries learn the value of competition before they go out of business.

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Demanding Gov. Protection in a Free Market a.k.a. An Open Letter to Jim D’Addario

A long long time ago, before income taxes were imposed upon the citizenry of the United States, the Federal government made its money from tariffs. If you wanted to import your goods into the US, you had to pay the government. Tariffs gave the government its loot and protected our corporations from competition.

But as the US became a huge economic juggernaut, US corporations wanted to export our goods to the rest of the world. Those corporations fought against tariffs and demanded “free” trade. They wanted to sell our goods to foreign lands without additional costs and impediments.

This system worked for a while. Because we were the world’s largest exporter, we we able to sell tons of our stuff to the rest of the world. However, it finally came back to bite us. Starting in the 60s Japan got really good at building quality products and used our lack of tariffs to import them at dirt cheap prices. Now we don’t make any electronics in the US.

But, for corporations, it was still a great system. US corporations simply moved production to third world countries such as Mexico and to former second world countries such as China. So now we don’t build much of anything in the US.

What I find so deliciously ironic is that a corporation is actually complaining about this system.

Jim D’Addario, the CEO of guitar string manufacturer D’Addario, is complaining about China. He’s complaining that the Chinese are able to produce cheaper strings and sell them for less and he’s losing money on it. He defends using the United States government his own private police force as follows:

How is possible for the public to ask the legitimate manufacturers to bear the role of the government and police every instance of (trademark infringement) with a law suit?

First, if you cannot compete in this “free” market, you should go out of business. Second, if the only way you can compete is by spending my tax dollars, you should go out of business.

Corporations rammed down our collective throats that a “free” market system works best. Now it’s killing you because you’re utterly inefficient. You want my tax dollars used to protect your trademarks?! What the frick do I get out of it? Do I get a share of your profits. Frick no. I get nothing while you get richer.

Jim, I have a solution for you which would benefit all of us. If you want government protection, demand tariffs on imported goods. You benefit because the cheap labor China relies upon and environmental laws it ignores are balanced by the collection of tariffs. I benefit because the federal government would no longer need to tax me as much. So I’d have more money to spend on your strings.

Jim, if you want protection. Ask for tariffs. Not a hand out. Thanks!

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The Copyright Industry Does Not and Cannot Compete in a Free Market

I’ve been meaning to write up a post about how the copyright industry lacks the ability to compete in a free and open market. What finally got me off my butt and write this post is the most amazing real-world example I could ever imagine.

U2′s manager Paul McGuinness asked Apple boss Steve Jobs to create a business model for the music industry:

Steve is the guy who has always magically known what the consumer wants before the consumer even knows it. I wish he would put that great mind and that great corporation of his to work devising a model that finally allows artists and creators to get properly rewarded for their work. Maybe he’s working on it right now. I hope so.

Paul McGuinness has been in the music industry nearly his entire life. But he cannot figure out a way to make money from it? Heck, it’s even worse than that. According to McGuinness, no one in the music industry knows how to make money running a business. Does that make any sense at all?

Unfortunately, it makes perfect sense.

Most people think that copyright is a property right. It is not.

Copyright is a government granted monopoly. The government grants monopolies over music, movies, photographs, etc., and then middlemen make money off of them. That’s how Paul McGuinness makes his money. Acting as a middleman between U2 and its fans.

Every time the copyright industry is faced with competition, they sue. If they cannot sue, they have laws passed so they can sue. If they cannot have federal laws passed to suit their needs, they have state laws passed instead. If they can’t get a government to pass the laws they want, they have treaties enacted which force all governments to pass the laws they want.

What I described above has happened countless times in the history of copyright. For a great example we have to travel back into time to when the player piano was first introduced. Back then the monopoly granted by copyright did not cover performances, only published sheet music.

So anyone could play any song he or she wanted without paying a dime. The music industry made money selling sheet music to musicians.

The player piano eliminated both paying for published sheet music and eliminated the musician who would have bought the sheet music.

So, as I said, the music industry of the 1800s sued. They lost because, as I said, copyright did not cover performances.

So the music industry went to Congress and had copyright laws changed to cover performances. So when the music industry sued again, they won. Of course they won. They always win.

I have to stress, the player piano was perfectly legal. The music industry could have competed with it just like restaurants compete with each other all the time. They could have advertised the fact that music played by real musicians constitutes a better product. That full bands are better than a mere piano. Etc.

However, at no point does the copyright industry ever simply roll up its sleeves to compete in a free market. Their “solution” to legal competition was and is to make the competition illegal. That’s why the music and movie industries have no problem suing their customers. The copyright industry doesn’t really have customers. They have tolls which we, by law, are required to pay under certain circumstances. When competition is created via new technology, they have new tolls added to the new technology. That’s a completely different mindset from someone running a business such as a restaurant.

So when I hear about someone who lived off the teet of copyright for his entire life, but who’s unable to come up with a business model that works in a free market, I’m not surprised at all. People like Paul McGuinness are not businessmen. They’re middlemen who live off what the government grants them. They never create. They never innovate. They merely take their cut. When their cut gets too small, they blame everyone but themselves. They even go as far as to sue their own customers or demand to have them kicked off the internet. As if that would magically make them start paying the old tolls again. People like McGuinness think this way because they don’t understand how businesses or markets work. And because they know of no other way.

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Mandating radios in our pants will not save radio!

As I’ve written about previously, the RIAA is attempting to get radio stations to pay the labels musicians for the music radio plays. Not through any free-market business approach, but through an act of Congress. It’s called the Performance Rights Act.

As nearly everyone knows, throughout the history of radio, the payments have gone the other way. Artists and labels have paid DJs and programmers to have their music played on the radio. It’s called payola.

Even though it’s illegal, and even though labels are demanding to be paid from radio stations, the labels are still paying payola. Why? Because getting your song regularly played on the radio almost guarantees it’ll be a hit.

Of course radio broadcasters have fought against the Performance Rights Act. But they’re changing their tune as of late. They’re willing to support the passage of the act if the feds mandate FM radios in every portable electronic device, e.g., iPods, cell phones, etc.

As everyone knows, among young people radio is in decline. Young people don’t listen to radio like they did back in the old days. Back in the old days radio was the only way to hear hip and cool new music. And it was basically the only way to get music in your car or on the beach. Sure, 8-tracks and cassettes came along, but you had to have the time and equipment to make your mix tapes.

But when the MP3 player came out, suddenly you had your entire music collection in your pocket. Now that’s also true of cell phones, which nearly everyone carries.

So why would anyone listen the radio, filled with commercials and obnoxious DJs, when you already carry your entire music collection in your pocket?

Radio broadcasters are hoping that if they force FM receivers in consumer products, that people will magically start listening to the radio again, just like the good old days. It won’t happen. Anymore than the government forcing automobile manufacturers to include buggy-whip holders will force car drivers to buy and use buggy-whips. The time has passed.

That’s not to say that radio is dead. Far from it. Heck, you can still buy buggy-whips on Amazon.

It’s just that radio will no longer have the same impact it had back in the old days. Serials are gone. News is better found online. You can get real-time traffic reports on your phone. And the days of kids fervently listening to their favorite DJs for the favorite music are gone.

Radio is still the best way to get a hit single, but it’ll never be the center of attention it once was. And merely mandating an FM radio in everyone’s pocket will not change that fact.

Of course it’s partially radio’s fault for their decline. AM used to be cool and the DJs were as famous as the rock & roll stars they were promoting. White kids wanted to listen to black music, and they could only hear it on the radio.

But AM stations stopped caring about finding the next cool artist, and started playing just the hits, the hits, and only the hits. It became mundane.

Then FM radios came out. FM used to be cool. It used to be cutting edge. AM was where hits were made. But FM is where DJs were free to experiment and music fans tuned in to hear the next big thing.

But as the old saying goes, all good things must pass, and so did the coolness of FM radio. The album rock format took over from experimental DJs and programmers. Then the hit music format took over from that. Suddenly FM’s formats were just as narrow and bland as AM used to be.

It’s really hard to get teens excited about the safe, bland, and mundane. And the current consolidation of radio has eliminated anything worth being fervent about.

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The Copyright Industry and the Three Stooges

Right now the copyright industry, music, books, movies, etc., are cruising along in sinking ships. Some ships are sinking faster than others. The movie industry has record ticket sales this year while the music industry is shadow of its former self.

The “problem” of the internet as a means to cheaply distribute copyrighted material has been around since the early 90s. It’s been about two decades later and still very little action has been taken.

In watching the inaction take place I can’t help but think of the Three Stooges. Remember the Three Stooges bit where they are in a sinking row boat? They get the idea to drill another hole to let the water drain out. It was pretty funny. But it’s not that funny when it’s taken seriously and is used as a part of a business plan.

Music Industry’s Sinking Ship:

The music industry finally allowed Apple to open its iTunes music service in April 28, 2003. Windows users were not allowed in the store until October of 2003. iTunes has been very successful. But it was too late to stop piracy. Much too late.

People were sharing music online since the mid 90s. Back then they used IRC and Usenet. Those services were hard to use and were avoided by most people because of the difficulty.

The original Napster solved the difficulty problem when it was released in 1999. Suddenly, it was easy for everyone to share music.

In the four years between Napster and iTunes, people were used to downloading DRM free music for no money. If iTunes had been released in 1998, before the floodgates of Napster had opened, the music industry would be in a much different situation right now. (But let’s not forget that iTunes really only works with iPods. Those millions of people who use non-Apple MP3 players could not take advantage of iTunes and were forced to use P2P services because there were no legitimate services available to meet their needs.)

But I don’t blame Napster. I blame the music industry’s refusal to take action in providing a service people were willing to use.

Book Publisher’s Sinking Ship:

A similar thing is happening with eBooks. There are publishers and authors who are refusing to release eBooks out of fear of piracy. Think about that for a second. They refuse to give customers a legitimate eBook option because they’re afraid someone else might choose to download it from a widely available and free illegitimate source.

People were sharing music for a decade prior to iTunes opening. The delay in releasing legitimate music did not delay or impede pirated music. It caused and facilitated pirated music. When consumers were faced with no legitimate option, they used Napster.

When a Kindle owner looks for his favorite book in eBook form and is unable to find it on Amazon, where is he or she going to look? The Pirate Bay? Most likely, or somewhere else.

How does not providing a legitimate eBook for customers stop piracy? How could anyone think something so completely ludicrous. I actually think this refusal to sell legitimate eBooks is more asinine than drilling a second hole in a sinking boat.

Movie Industry’s Sinking Ship:

A similar problem is happening with the movie industry. DVD sales are sinking and blu-ray sales are not taking off. It’s partially the fault of the economy, but it’s also a simple fact that the vast majority of people have no need to own a copy of a movie.

Sure you might be a huge fan of the Godfather and maybe you watch it every month. But who really needs to see Paul Blart: Mall Cop more than once? The vast majority of movies are at best, one time events. The vast majority of people who enjoy movies do not obsess over them to the point of watching and re-watching them. The entire business model of people buying hard copies of movies was nothing more than an anomaly.

You might remember an advertisement from several years ago, I think it was for a company called Quest, about a little motel offering every movie ever made. That service is technically possible. Who would not love a service where they could instantly rent any movie or any TV show ever made for a couple of bucks. A few bucks for high def.

But the movie industry is paralyzed. There’s the old DVD/Blu-ray division that is trying to prop up that dead model. There are theater owners worried about their business being marginalized. There’s actors, producers, music people, and the studios all fighting for their cut. And everyone is demanding too much of a cut.

While the movie industry spins its wheels, you can currently get nearly any TV show or movie via bittorrent in about an hour or two. Heck, you can get the entire series of any TV show you want in about 6 hours.

By the time the movie industry finally gets its act together and provides the service I described above at a fair price, will it be too late? The longer they wait, the lower the “fair” price will be. If this service had been introduced back in the early 00s when downloading a movie was unheard of, they probably could have charged a 10 buck rental rate for the privilege of getting it instantly without leaving your house. But now that people are used to getting movies they want without any DRM restrictions, they’d only be willing to pay less. My guess is that $5-6 for a HD rental and $3 for a SD rental.

But of course someone within the industry would complain that the price would cut into its DVD sales and would interfere with its broadcast licensing deals. And they’d be afraid of piracy if they put their movies online. And they’d be afraid of marginalizing some other profit area. So even if this system is ever opened, I highly doubt the prices charged will be considered reasonable.

Cause and Effect:

Of course the copyright industries will bitch about piracy. They’ll blame the immoral pirates and downloaders. They’ll claim we need new draconian laws to prop up their business models. They’ll eventually turn copyright laws in to our next drug war. Already people are being ordered to pay millions of dollars merely because they have 24 dollars worth of music on their computers. (For those not familiar with the Jammie Thomas case, there was no evidence presented at trial that she shared any music with anyone unauthorized to have it.)

But the problem was not caused by piracy. Piracy was caused by the copyright industries’ refusal to provide what customers wanted. In the 90s, music fans wanted to buy MP3s. The music industry did not let them. In the 2000s movie fans wants wanted portable movies, or to stream movies from their PCs to their TVs, or to watch movies on their laptops without discs, etc. But the movie industry refused to offer such services. As we speak book authors and publishers are forcing eBook fans to go to the Pirate Bay because the authors and publishers refuse to provide any legitimate option.

I’ll say it again, pirates did not cause piracy. The internet did not cause piracy. Piracy was and is caused by the lack of any legitimate, reasonably priced, and easy to use alternatives. It’s their fault, not ours. But we’ll probably end up paying for it. I only wish this comedy was a joke.

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Will the music labels bite the dust in 2013?

Way back in 1999 the music labels attempted to sneak in legislation which would have made all music mere works for hire. People who create copyrighted content for hire usually come from the literary realm. Think of those cheap and plentiful pulp fiction books or those romantic novels for lonely housewives. Publishers of those books hire out the writing under a general plot. To put it another way, the plot is already written, so all the writer has to do is fill in the blanks.

Most of the background music you hear on TV and in advertisements is work for hire. The producer orders a song with a funky uptempo bass line and the song writer regurgitates it.

But I find it hard to believe that Lou Reed’s Metal Machine Music was somehow created at the direction of some drone at the label.

Anyway, the legislation did not pass because the musicians raised a huge stink about it and the labels backed down. People who create copyrighted content for hire do not enjoy all of the rights associated with copyright. But I still did not fully understand why the labels attempted what they did.

Now it’s all clear. Wired has a great write up about it. In a nutshell, the Copyright Act of 1976 gives song writers and musicians the chance to get their copyrights back. And the sand is running out. This will start happening in 2013.

Suddenly the labels won’t have their massive back catalog of music, which earns a lot of money not only in direct sales to consumers, but in licensing for movies and TV. So new music is not selling. They won’t have any successful old music to sell. The labels will be mere shells of their former selves.

And I just love how the labels are scheming to get around this law. Remember last week when a company called BlueBeat.com claimed copyrights to all of the Beatles music and started selling it online? BlueBeat.com claimed that had the copyrights to the music because it rerecorded the songs which gave them new copyrights. They were even allowed to register those new copyrights with the feds.

Of course everyone laughed at the idea that someone could obtain copyrights over the entire Beatles catalog merely by rerecording them.

However, the joke might be on the musicians, because that’s the label’s plan. The labels are claiming that the new digital remixes deserve new copyrights. So even if the Eagles gets the copyrights back on their original analog recordings, the labels will still hold the copyright to the new digital recording. The courts will be sorting this crap out for decades.

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Apple vs. Psystar: Our first sale rights are safe

There are some who believe that reselling our legitimately bought CDs, games, and DVDs is somehow stealing and should be made illegal. However, the right of first sale gives us the right to sell and resell what we’ve bought without any interference from the original owner.

The company Psystar has been selling Mac clones. Apple does not like the clone market and sues any company that tries it. In part Psystar argued that they have a right to buy Apple’s OSX software and resell it to customers. The Court disagreed and completely rejected Psystar’s first sale defense.

Initially, I was troubled that our first sale rights were being eroded. However, the good news is that the Apple vs. Psystar case really has nothing to do with the right of first sale. From the opinion:

Even assuming arguendo that Psystar was the owner of a copy, the first-sale defense fails here. Section 109 provides immunity only when copies are “lawfully made.” The copies at issue here were not lawfully manufactured with the authorization of the copyright owner. As stated, Psystar made an unauthorized copy of Mac OS X from a Mac mini that was placed onto an “imaging station” and then used a “master copy” to make many more unauthorized copies that were installed on individual Psystar computers. The first-sale defense does not apply to those unauthorized copies.

In other words, Psystar was not buying and then reselling Apple’s OSX software. It was reselling an unauthorized copy. Psystar was likely buying licenses for each copy. However, the first sale doctrine does not apply to the right to resell and transfer copyright licenses, it only pertains to the physical copy. (Whether it applies to the MP3s bought on a site such on Amazon has not yet been decided.)

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