analoghole

RIAA's piracy damage claim and the GDP of France

Over at Boingboing.net, Cory Doctorow linked to a rather obscure post on Donny's Blog noting that in its lawsuit against the Swedish BitTorrent site ThePirateBay, the RIAA's statutory damage claim suggests that the amount of music piracy tied to this one site in a single month is many times the GDP of France:

A blogger multiplied the number of music downloads from ThePirateBay in a month by the $150,000 the RIAA asks for in statutory damages for each download and discovered that the music industry believes that one month's worth of downloads costs it more than the GDP of France.

The blogger in question:

...   Lately we've been hearing more and more about the RIAA suing people over downloading music. Many people are skeptical of of the figures of lost revenue the RIAA reports, giving arguments like not every song downloaded equals a song that would have been bought. With all of this talk, I decided to investigate the cost of piracy, using the perfectly reasonable figures given by the RIAA: $150,000 per infringement.

     The Copyright Act permits a copyright owner to claim $150,000 per infringement, and the RIAA has been using that figure when they've sued individuals. However, they claim that they only lose 300 million per year due to piracy, which would equate to only 2000 songs downloaded per year. Clearly something is wrong - to find out the real cost of piracy, I went to http://www.thepiratebay.org to find out how many songs are downloaded in a month, in order to make a more accurate estimate of the losses to the music industry.
...

Now here's the thing.  Of course "Donny's" tongue is firmly in his cheek, and we can all agree that the harm to the RIAA and its members from one month of piracy at ThePirateBay, whether calculated as lost sales, or the retail price the songs would have fetched in a store, doesn't come close the GDP of France.  And certainly many would agree that the RIAA's damages claims in this lawsuit and others tend to overstate their actual losses.  But the $150,000 figure cited by Donny doesn't relate to any sort of actual loss.  It's a statutory damages figure provided for under U.S. copyright law (17 U.S.C. Sec. 504):

Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

The next subsection goes on to say that if the plaintiff can prove the infringement was willful then that $30K figure rises to $150K.  These statutory damages seem intended to provide the option of a nice high figure to serve the dual functions compensating the copyright owner(s) when actual damages are hard to prove, and acting as a punitive deterrent.  But an important thing to notice is that Donny not only misinterprets what a statutory damage claim means, but more importantly, he misreads the statutory damage provision.  The statutory damage amount ($30K in the paragraph above, $150K if willful) is not per infringement, but rather, per work -- "for all infringements involved in the action, with respect to any one work."  So if RIAA were to prevail, and be awarded the maximum statutory damages, the total would be $150K times the total number of individual song titles that people downloaded, not the total number of files.  In Donny's analysis, that means that, roughly speaking, RIAA would be entitled not to $11 trillion ($150K times the 73+ million individual downloads), but rather, $355 million ($150K times the 2370 torrents available that month).

Yes, it's still a staggering figure -- we're only adding up claims with respect to a single month and yet the total is roughly equivalent to a third of what the music industry claims they lose as a result of "piracy" in an entire year ($1 billion -- Donny's says the RIAA's yearly loss claim is $300 million, but actually RIAA claim they lose that much in counterfeit disc sales alone).   Put another way, if based on a single year, RIAA could theoretically win a judgment against ThePirateBay of $4 billion, or 4 times what they claim they lost to "piracy" from all quarters.  And yes that seems excessive.  But it's not the GDP of France.  It's not even the GDP of Malawi.   Moreover, there's no chance of collecting, since ThePirateBay doesn't have that much money.

Disney Stakes its Own Claim in TV Downloads

Disney announced that it is going to make some of its shows downloadable -- or actually streamable, juding from the press release -- from the web, in May and June.   "Desperate Housewifes," "Lost," and "Commander in Chief" are mentioned specifically.  Shows will be availbale the day after they are broadcast.  Oh, and there's going to be a free trial period during May and June.  The hitch?  Users/viewers will be able to skip forward and back between "chapers," but not skip ads (and so it sounds likely the chapters may correspond to ad breaks in the broadcast version, with ads at the beginning of each segment).  Since the specific shows mentioned are one salready available for download via iTunes, it will be very interesting to see how this trial program fares.  Assuming similar video quality (and the press item is silent on that), we'll get to see how Disney's direct "streamed, free-with-ads" competes with the iTunes model of download (so it's portable, and DRMed but relatively flexible) for $1.99.  If Disney's trial program doesn't allow downloads -- meaning use on non-net-connected devices, then my prediction is that it doesn't put much of a dent in iTunes sales.
  A little dent, but not a big one.

Video and Audio from State of the Net conference

Just noticed that the Congressional Internet Caucus has posted some video and audio from the 2006 State of the Net Conference, held in February.  A couple of semi-interesting items:

Innovation Disrupting Copy Rights: What is the Appropriate Role of Government?
Is 'Net Neutrality' on the Internet a BIT Relative?

Maybe Domestic Calls Are Fair Game Too

AG Gonzales was back on the Hill yesterday testifying once again about warrantless surveillance.  (WP item.) This time, in response to a question from Rep. Adam Schiff about whether the administration had the authority to intercept purely domestic communications without a warrant if it thought they were related to Al Qaeda, the AG said "I'm not going to rule it out."  That a senior official thinks the administration's authority extends beyond the scope of the program they've previously admitted to (one that was claimed to involve only communications involving someone abroad and someone in the US) isn't terribly surprising.  The various legal arguments put forth to justify the program wouldn't seem to limit the president's authority to monitor purely domestic calls, so the only thing preventing such a program from taking place would be fear of public outrage or some sort of political backlash.  [UPDATE: Jack Balkin at Balkinization makes a similar point, although far more eloquently and in greater depth.]  And that's what Gonzales has claimed was the limiting factor that kept the previously-announced program from extending to purely domestic communications.  Of course, since the plan was to keep the surveillance program(s) secret, which the administration did and continues (mostly) to do, then public outcry wouldn't necessarily have been a problem (at least in theory).  Perhaps because the public outcry over what's been announced so far hasn't been as bad as it could have been, Gonzales is slowly inching the administration's claims of inherent authority forward bit by bit, continuing coyly dropping hints about another, double-extra-secret program that may-or-may-not involve listening to purely domestic communications, that may-or-may-not be between U.S. citizens, and may-or-may-not relate to Al Qaeda.

But of course, Gonzales hasn't (and claims he can't) divulge the details, or even the existence, or this possible other, highly clasified program.  "I do not think we are thumbing our nose at the Congress or the courts," Gonzales said.

On the other hand, as for whether the administration is "flipping Congress the bird" or telling the courts "to go suck eggs," Gonzales said his staff had not fully researched the relevant legal issues at this point, and thus he could neither confirm nor deny.

Showtime inks a deal with the Smithsonian

Two recent NYT articles cover it: March 31 and April 1 (though these items in the former paper-of-record will likely be behind paywalls before too long).  There's some discussion over at the Patry blog about it, too.  While locking up the film rights to the entire collection of a great, semi-public institution raises a lot of red flags, the deal may not be so bad in the end.  For one, it's a right of first refusal, meaning that if a documentary filmaker comes to the Smithsonian for some significant help or content (such as film or music from their extensive historical collection), then the soon-to-be-created Smithsonian network (that will be a joint venture with Showtime) will essentially have an option to on rights to show the work.  The details of the deal are key, and unfortunately, they haven't been made public.  If the Smithsonian network gets a right to the work at some artificially low price they set, then yes, that would be bad.  On the other hand, if the network just gets to match whatever offer is on the table, it might not be such a bad deal (although there are certainly situations where the existence of a right of first refusal out there could put the kibosh on some projects).

Fred Von Lohmann's worried comments over at Patry -- emphasizing how the deal would be especially bad if the WIPO Brodcast Treaty were to pass -- are certainly justified.  Since the treaty would grant quasi-copyright rights to broadcasters of content, and Showtime would have some rights to broadcast documentaries are made with Smithsonian content, the combination of the deal and the treaty could effectively lock up a lot of Smithsonian content for 50+ years.  Someone wishing to use, say, some film footage that's in the public domain for copyright purposes, where the original is held by the Smithsonian, and snippets of the footage have been used in a previous documentary broadcast on Showtime, would either have to obtain the footage from the Smithsonian (and submit to a deal with Showtime, if Showtime wanted it), or would have to grab the snippet from the previous documentary broadcast on Showtime -- and under the Broadcast Treaty, that would require permission from Showtime, even if the clip were in the public domain (and leaving aside issues of fair use if the clip is short, etc.)

But look on the bright side, this is a paradigmatic example of why the Broadcast Treaty is bad.  If Smithsonian hadn't entered into this kind of deal, opponents of the Broadcast Treaty would have had to invent the deal as a hypothetical example of the kinds of bad things the treaty would do.  This is the flagship float in a parade of horribles.  Imagine how that might go over on the hill.  "My God, you mean all that good old American history over at the Smithsonian would be owned by a cable network -- the one that makes all those shows about lesbians?!  Are you serious?"

On the other hand, if only Showtime would just pick up the option to bring Arrested Development back, maybe there'd be some room for negotiation...

Brokeback Business Model

Yeah, yeah, it's a bad pun -- but inevitable.  Sorta like the announcement (see this item on boingboing.net) that two services, Movielink and Cinema now, are starting to offer some Hollywood movies for download the same day they are released on DVD.  That ought to satisfy those clamoring for the industry to get its act together and offer legal movie downloads, right?  Not exactly.

According to this LA Times story, the two services that will begin offering downloads of just-released movies in the U.S., CinemaNow and Movielink, will both offer DRMed download files playable only on PCs. Movielink (co-owned by the major studios) plans to offer in the ballpark of 100 new releases, priced at $20-$30 each.  CinemaNow plans on 75 new Sony Pictures releases, and will charge $20 a download (although they seem to have a promo running -- a second download is $5).  Downloads from both services are locked to a PC, at least for now.  Apparently, Movielink will allow downloads to be burned to "backup" DVDs, but those DVDs will be DRMed as well, so they won't play on a standard DVD player -- just a WinXP PC (and presumably, only the same PC used to download the video, although that's not entirely clear).  [UPDATE: According to CNN's blurb on the services, Movielink will let users view the download on up to 3 other PCs, kinda like iTunes does.]  Oh, and you can only access the purchase sites, download movies, or play them back on a PC running XP, with the service pack, on Tuesdays, if you ask really nice.  (Just kidding about that "Tuesdays" bit, but Mac and Linux users: Jack Valenti sez you is the suck.)

Of course, legal movie downloads aren't entirely new.  Movielink has been offering (legal) downloads for a few years, but only of older films that have been out for a while on DVD.  A couple of similar services have offered recent releases in Europe on a smaller scale.  What's new about these announcements are that they are backed by major Hollywood studios, and apparently will include some big upcoming titles (like Brokeback Mountain, to be released this week).

The article suggests that there is a ready market for these downloads, but that the real hurdle is making the downloads playable on regular TVs.  (David Card, a "senior analyst at JupiterResearch in New York" is quoted: "There are college students, there are business travelers and kids in the back seat of the SUV. But the missing link to this kind of an offering is getting it on the TV screen."

But of course, the real target market is Congress, and to a lesser extent, retailers.  While it's nice to see the studios launching something, the current offerings will do little more than provide the studios an opportunity to point to Movielink and CinemaNow and say, "See, we're doing something!" (and then whisper to retailers, "See, don't worry, we're not doing much!")  The inability to play the downloads on a "real" TV is part of the issue, but contra Mr. Card, that's not the big stumbling block for either college students or business travelers -- both groups routinely watch movies on their PCs.  Really, the no DVD-burning aspect is just shorthand for the larger problems inherent in DRM: crippling the product just makes it more difficult to use.

Pricing is also a big part of it.  It's too high (and in the case of Movielink's "$30" figure, ridiculously high).  There's about zero chance of these services catching on with college students, or anyone who's not housebound.  But on the other hand, the studios have to start on the high side, because they won't be able to raise prices later.  (Witness the uproad over the proposed increases in iTunes pricing.)

Still, even though the studios have taken so long to actually get to market with download services that the shortfalls in these current efforts can't be written off as the result of some hurried rush-to-market, this development could represent the beginning of a bigger pusch by the studios to offer downloads that people will actually want.  For now, though, if you're in that limited demographic that (a) values their time so much that they can't take the 5 or 10 minutes necessary to buy a DVD from Walmart or Best Buy or rent it from Blockbuster, or order it overnight from Amazon or get it from Netflix, but (b) still has sufficient time to spend a couple hours downloading and then watching a movie, and (c) is sufficiently loaded to have a trciked out PC setup suitable for watching movies, but (d) hasn't spent the money to get digital cable or satellite so they can get on-demand viewing of recent releases, then these new services are perfect for you.

The inevitability of analog holes

Not a technical analysis, but Infoworld has an editorial lament on the prevalence of analog holes generally.

Another Google subpoena issue

Declan McCullagh reports over at cnet news that a judge in SF has upheld a subpoena to Google, arising out of FTC litigation against a third-party, for the contents of a Gmail account (including the contents of messages from January 1, 2003 through the present).  The magistrate's ruling doesn't seem to be available online (at least not yet), but depending on the scope of the subpoena and the order, this case is likely to drag on for a while.  Taking Declan's description of the magistrate's opinion at face value [See Update below], it's difficult to square the decision with previous rulings in the Ninth Circuit interpreting the Electronic Communications Privacy Act/Stored Communications Act -- namely Theofel v. Farey-Jones, 359 F.3d 1066 (9th Cir. 2003), in which the court found that messages on an ISP's servers, including those that had already been opened and read, were in "electronic storage," because they were being kept for "backup" purposes.  "Electronic storage" is a term of art in ECPA/SCA, and refers to the temporary storage of messages incidental to their transmission and delivery.  The standard for obtaining or disclosing the contents of messages in "electronic storage" is high, so the Theofel court's broad (and hotly-contested) reading of the term "electronic storage" effectively raises the bar for anyone trying to obtain the contents of electronic mail.  But even in the absence of Theofel (which is at odds with previous court's ruling on ECPA/SCA), it's hard to see how a mere subpoena from a government-appointed receiver is sufficient to obtain the contents of all messages in an email account - including, apparently, unopened messages that the owner of the account has never read.  If the police sought such information under similar circumstances, they'd need a search warrant to get it.

There's probably more to this story, and the magistrate's ruling.  Perhaps there are other facts not mentioned in the story that support upholding the subpoena (or the judge's order is drafted more narrowly than the story indicates).  Either way, this case is probably going to result in plenty of discussion.

[Update:  Yes, there is more to the story.  The Gmail subscriber who is challenging the subpoena gave Google permission to hand over the contents of his email account, and then challenged the subpoena.  The first paragraph of the slip opinion (still not available online) reads:

On January 31, 2006, this Court denied third party Peter Baker's Motion to Quash and ordered him to give permission to Google, Inc. to produce emails from one of Mr. Baker's accounts. Baker gave his permission to Google, but he immediately filed an objection to the Court's order with the district court, a motion to stay the order pending appeal, and a notice of appeal with the Ninth Circuit. For the reasons set forth below, the Court DENIES Baker's motion to stay...

Now, there's something a little odd about the notion of being ordered to give permission, and some interesting ruling may yet come out of this case, but that's a subject of Baker's (the Gmail subscriber's) pending appeal.  According to the magistrate's order, Baker did give Gmail permission to hand over the contents of his Gmail account, and for purposes of ECPA/SCA, that's all Gmail needs.  (18 U.S.C. Sec. 2702(b).)  Baker has appealed the magistrate's previous order on the subpoena, but the issue in the magistrate's most recent (March 13) ruling was whether the court allow Baker to continue not complying with the court's previous order while his appeals were pending, or instead would go ahead and require Baker to comply.  Magistrate Judge Laporte opted for the latter.]

Black-Bag Jobs

Jack Balkin at Balkinization points out a new story at U.S News, "The Letter of the Law," indicating that the administration's belief in its "authority to conduct warrantless searches and surveillance" (in the words of the DOJ White Paper) extends not just to the NSA wiretapping programs that have been a hot topic for the past few months, but to physical searches as well.  This question has been raised before (by, among others, Sen. Leahy in AG Gonzales's appearance before the Judiciary Committee in February), and the story doesn't exactly provide rock solid evidence that such warrantless physical searches have been carried out, but it does provide some background for the notion.

On the separate-but-related question of warrantless electronic surveillance, the story notes pressure from David Addington on the DOJ and FBI to use the fruits of such surveillance in criminal cases.  And frankly, that's just kind of weird.  It's unclear whether people like Addington recognize that such uses in the realm of criminal prosecutions would tend to undercut the administration's claims of authority to conduct the program (which revolve around intelligence gathering and national security), but surely Addington would have recognized that using intercepts from this kind of surveillance in a court case would subject the program to unwelcome judicial scrutiny.  According to the story, Addington "told Mueller to be prepared to drop prosecutions if judges demanded to know the sourcing."  Perhaps the reasoning was that, if a judge was so accommodating of the government as to allow use of such intercepts without asking questions, that judge was likely to help create some good case law that might justify uses in other cases.  Although the story refers to Addington's pressure to use the intercepts in "court cases," the idea was probably to use the intercepts at earlier stages of a criminal investigation, such as in applying for (regular, criminal) search warrants or wiretap orders, i.e. to use the intelligence gathered through warrantless surveillance to demonstrate the probable cause necessary to get a warrant in a criminal case.  Convincing a court to issue warrants based on evidence gathered through warrantless surveillance (without delving too deeply into the warrantless surveillance program) would have been a smooth and rather backhanded way of garnering a judicial imprimatur for the program, without actually having to justify.  If it worked, the administration could later claim that judges "were aware of" the program, and might even go so far as to claim that courts had approved it.

It's not clear from the story whether surveillance intercepts were actually introduced in court.  It seems there was a great deal of push-back from former Deputy AG James Comey and FBI head Robert Mueller against the theory.

As for whether the government has actually been conducting warrantless black-bag jobs, the story includes an anecdote about what sound like ham-handed searches of the office of a lawyer for a suspect in a terrorism investigation.  Of course, we wouldn't know if these were warrantless searches -- courts have had the authority to issue so-called "sneak and peek" warrants for quite a while, and that may be what happened here.  The notion that it was a lawyer's office being searched, however, raises serious questions even if the search were court-approved.

"For the FBI, the very mention of the term 'black-bag jobs' prompts a bad case of the heebie-jeebies."
Yes, it gives at least some of us outside the FBI the "heebie-jeebies" as well.

Why aren't there more ads on DVDs?

Following up on the SXSW panel discussion, I'm wondering why DVDs don't have more ads on them.  CSS, the DRM system used on DVDs, allows the maker of the DVD is make some content non-skippable.  So, for example, the FBI anti-piracy warning that comes on the screen can't be skipped or fast-forwarded.  So I'm wondering, why haven't the makers of DVDs exploited this feature to include more actual product advertising that home viewers can't skip over?  The movie industry has shown little compunction over blasting a few minutes of product ads at its theater audience.  Home audiences aren't captive in the same way as theatergoers, but CSS allows the content owners to force display of ads in a way that broadcasters (in the age of Tivo) cannot (although there are certainly efforts to disable the ability of ad-skipping for broadcast TV, too).  So why aren't we seeing more non-skippable ads at the beginning of DVDs?  Or even in the middle (some sort of forced "intermission")?  It seems like this would be yet another way to exercise price-discrimination, offering a cheaper, ad-supported version of a DVD, and selling a more expensive version (sort of like the "director's cut" version now available) with fewer or no ads?  This sounds incredibly annoying to me, but the DRM in the current DVD standard makes it possible, so why isn't it happening more?  Is it because the studios or DVD distributors think this would turn off consumers?  Is it because directors would object (see ClearPlay litigation)?  Or perhaps is this something we'll see more of once the new video disc standards like Blu-Ray and HD DVD are rolled out?  Or is this already widespread, and I've somehow missed it by watching the handful of DVDs that don't have it?