There's an almost entirely silly article over at CNN speculating -- with absolutely no knowledge -- about the identity of a woman seen frequently with North Korean leader Kim Jong Un. I'm not quite sure how that makes a news story, but what caught Dark Helmet's eye was that in this bizarre little story, there was a bit from Disney, in which it felt compelled to mention that a performance seen by Kim and the woman that included Disney characters was not authorized:
The mystery woman accompanied the young leader to a Pyongyang theater on Friday night to watch a performance of North Korea's Moranbong band. The display included a cast of Disney characters, attracting the attention of The Walt Disney Company which issued a statement Tuesday saying it had not authorized their use.
As if (1) anyone cared about that or (2) anyone actually thought that Disney had licensed its characters to the North Korean government for a special performance.
This is what happens when, as a company, you seem to have infringement-on-the-brain, and think anything and everything must absolutely be framed within the context of whether or not something is infringing.
The broadest, most obvious trend in media consumption is the shift to an on-demand world, where content is available when you want it on whatever device you're using. In the day-to-day, this gets lost behind neverending squabbles about licensing, and severely limited offerings accompanied by bold statements about embracing technology—but in the long run, what's happening couldn't be any more clear. Any long-term strategy for relevance and success in the world of media has to embrace that momentum by building new business models around such distribution schemes, while gracefully dismantling the business models that rely on dying habits and the limitations of antiquated technology.
Or, you can attempt to reshape the cultural norms of future generations by going to the source: kids. At least that's what analyst Todd Juenger suggests in a recent report about children's programming on Netflix. Juenger conducted a focus group with mothers and discovered that they really like Netflix as a source of entertainment for their kids, especially since they can put it on whenever they want—and that kids are growing accustomed this. To hear Juenger talk about it, you'd think this was both surprising and bad (it's neither). His advice to the providers of children's programming? Stop this trend immediately:
His advice for entertainment companies is to be cautious about how much kids programming they make available to the online video streaming provider and in which windows. "We remain firm in our belief Viacom and Walt Disney should limit their content availability on Netflix," Juenger wrote.
...
"Moms are increasingly directing their kids to alternative viewing modes for content control, commercial avoidance and time management," Juenger summarized the findings. "The moms we talked to originally subscribed to Netflix for themselves, but have recognized the dwindling supply of content for adults and are now using the service primarily for their kids…The content selection is perceived to be significantly better for kids than for adults, and the lack of commercials and ability to control the viewing choices are seen as positives.”
According to the analyst, the focus groups described children as device agnostic, "happily watching on TV sets, tablets, computers, even phones, with indifference." The result: “Our concern regarding Viacom and Disney’s kids’ networks has been reinforced,” Juenger said. “Viacom and Disney should do everything in their power to steer viewership toward modes with the best long-term economics, namely traditional TV and emerging forms of TV Everywhere VOD.”
Yes, he's confirmed that the "lack of commercials and ability to control the viewing choices are seen as positives", in case anyone in Hollywood was still clinging to the hope that consumers would grow to hate those things. And yes, kids are "happily watching" on a variety of devices, and we can't have that, can we? Some might respond to the observation of a clear consumer preference in young children by trying to embrace that change early (if anything Hollywood does with technology can be called "early" at this point) but Juenger thinks they're better off trying to hold back the tide, or at least redirect it into their proprietary canals.
The funniest part is that suggesting Disney and Viacom should try to "steer viewership" is appealing to the very power such companies are losing. Big media empires don't get to "steer viewership" the way they used to, and that's exactly why these new distribution methods represent a threat to them. Juenger is suggesting they keep the sinking ship afloat by tying it to... itself. That's not going to work.
Kids are notoriously picky eaters when it comes to anything that isn't a dessert. Parents aren't helped when their kids are bombarded by ads on TV for all kinds of junk food. But here are a few food efforts that might divert kids' attentions back to healthier foods.
There has been plenty of talk over the years about why we keep extending copyright. Of course, we've discussed the infamous Mickey Mouse Curve, showing how copyright extension always seems to happen whenever Mickey Mouse is going to hit the public domain.
However, Julian Sanchez notes that this doesn't explain the whole story. After all, if it was just about protecting the very, very small number of works that still have commercial value after so many years, then you would think we would have evolved away from the "copyright absolutely everything for as long as possible" model, to one that plenty of people have suggested: one where there are regular (and perhaps escalating) recurring fees to keep renewing your copyright registration. That way, works like Mickey Mouse could stay covered by copyright, but all the other works which have been otherwise abandoned can actually contribute back to culture and be used by anyone who wants to make something with them.
As Sanchez notes, you would think that even the Disneys of the world would like this model better. Even if it had to pay such recurring fees, the overall cost will ultimately be tiny compared to the value of the copyright. Plus, it would then open up a treasure trove of public domain material that they could use in their own works -- and Disney, in particular, has a well known history of making use of public domain works.
So why do we still have a "copyright everything for as long as we live, plus 70 years" (for now)? Sanchez posits a compelling theory. That Disney and other big copyright holders like this, because it keeps them from having to compete with their own back catalog:
Insanely long copyright terms are how the culture industries avoid competing with their own back catalogs. Imagine that we still had a copyright term that maxed out at 28 years, the regime the first Americans lived under. The shorter term wouldn’t in itself have much effect on output or incentives to create. But it would mean that, today, every book, song, image, and movie produced before 1984 was freely available to anyone with an Internet connection. Under those conditions, would we be anywhere near as willing to pay a premium for the latest release? In some cases, no doubt. But when the baseline is that we already have free, completely legal access to every great album, film, or novel produced before the mid-80s—more than any human being could realistically watch, read, or listen to in a lifetime—I wouldn’t be surprised if our consumption patterns became a good deal less neophilic, or at the very least, prices on new releases had to drop substantially to remain competitive.
This story certainly fits with Disney -- who famously decides to completely stop selling certain old classics and put them "in the vault" for a while, pulling them off the market entirely. For Disney, it's all about keeping out competition, which it wouldn't be able to do if copyright didn't last so long.
This actually reminds me of the missing 20th century of books that we discussed a few months back, highlighting how the amount of new works from each decade drop off rapidly the further back you go, until you hit 1923 -- the current cut-off for the public domain.
Sanchez does note that it's possible this actually drives more investment into new works, since they don't have to compete with the old. And, if you believe (which he doesn't) that new works automatically have more value than old, then you could make a twisted sort of argument that this kind of protectionism, and effective locking-up of about a century's worth of creativity, does "promote the progress" in that it moves the focus to newer works, rather than older ones. But I don't buy that at all. It ignores the fact that the giant gap doesn't just represent competitive works, but also raw material and inspiration for all kinds of amazing new works -- which are effectively killed off.
That gap represents lost culture. But, for the big legacy entertainment players, it might also represent repressed competition. That shouldn't really be surprising. After all, that is the whole purpose of government-granted monopoly privileges.
Summary of Parts One and Two: The essential balance of copyright between incentives for creators and the feeding of a rich and unlicensed public domain has been undone by a long series of misguided efforts to save copyright by making its rules both stronger and less enforceable at the same time. The industry’s tactics have backfired, eroding what was left of any moral authority for obeying the law. And that was the chief (and most efficient) mechanism for enforcement all along.
The repeated and retroactive extension of copyright terms, largely at the behest of the Disney Corporation, has had the unintended consequence of creating a nation of felons, both technically and in spirit. According to one provocative study by John Tehranian, we all violate copyright unintentionally many times a day. And to the extent we realize it, we don't care.
To return to the parking analogy, the result of these legal changes has been to paint every curb a red zone—it's now illegal to park anywhere. The result is not perfect enforcement of copyright but its opposite. No one obeys the law or thinks they ought to. Getting caught is more or less a random event, and rational consumers won't change their behavior to avoid it.
The center will not hold. Large media holding companies are becoming desperate, expending their resources not to find new ways of making money but to secure passage of increasingly draconian laws (SOPA) and treaties (ACTA) that give them more, largely unusable new powers. Even if passed, these legal tools will do little to improve legal enforcement. But they are certain to cause dangerous and unintended new harms.
At the same time, the marketing machines of these same companies have convinced us that our right to enjoy content is inherent—the American Way. Once offered, we imagine free content should always be free, even if the rightsholder changes its mind or intended all along to attach conditions to consumption based on time or place or the ability to associate mechanisms, such as advertising, that allowed for indirect revenue generation.
Americans don't understand that subtlety, and rightsholders have given them no reason to try. Public education efforts have been pathetic. Instead of teaching consumers the costs and dangers to the delicately-balanced system from copyright infringement, they emphasize moral and legal prohibitions that are rightly perceived by consumers as petulant, cynical, and amusingly out-of-touch.
These campaigns, for starters, say nothing about the economics of content production and distribution. They are morality tales, narrated by fabulists who pride themselves, in their day jobs, on their mastery of manipulation and misdirection. It's as if Darth Vader sat down with preschoolers to talk about why they shouldn't throw stones at the Death Star because of the potential for property damage.
Consider just a few examples below: YouTube's mandatory copyright "school" for violators and
the classic 1992 "Don't Copy that Floppy:"
Clearly, not much has changed over the last twenty years in efforts to change public perceptions and behaviors. The Hollywood that can produce blockbuster movies somehow can't make a PSA that isn't a self-parody.
I think the public can be educated, and should be. Here's where I part company with those who reject copyright altogether. The theory of copyright—limited monopoly in exchange for a rich public domain—is still a good one, and the system created by the English, adapted by early Congresses, had the virtue of being largely self-enforcing and therefore efficient.
It is the 20th and 21st century imbalance in copyright, and not copyright itself, that must be fixed. And it can be fixed. There is a way out of this dangerous and increasingly tense cold war between content industries and their customers. Here's a simple three-step solution:
If rightsholders want consumers to obey the law and support their preferred business model, they first need to stop making it impossible for consumers to follow the rules. Copyright needs to be weakened, not strengthened.
Content industries need to end the stalling and excuses—perhaps understandable in 1998, when I first wrote about digital distribution in "Unleashing the Killer App," but not now, nearly fifteen years later. They need to embrace digital media and new channels fully, even if doing so means tolerating a considerable amount of unauthorized distribution and reuse as working models for profit-generation rapidly evolve.
Public education needs to focus not on self-righteous indignation but on collaborating with consumers on finding ways to compensate creators for the value of their work. If consumers understood the economics of content creation and distribution, and given an easy way to cooperate, they'd do it.
Ironically, there's every reason to believe that embracing a relaxed copyright regime and encouraging creative reuse would actually generate more revenue for creators. That, in any case, has been the lesson of every form of new media to be invented in the last hundred years or more.
Each of them was initially resisted and branded as illegal and immoral. Each of them—from the player piano to the photocopier to the VCR to the Internet—has instead offered salvation and riches to those who figure out the new rules for working with them and not against them. (Hint: network effects rule.) Rightsholders consistently confuse each fading media technology with the true value of the content they control. The medium is not the message.
For now, industry apologists—the MPAA, the RIAA, the U.S. Chamber of Commerce and others—are caught in a dangerous cycle of denial and anger. A growing number of consumers refuse to follow the current rules. So they lobby to make the rules stronger and the penalties more severe, amping up the moral rhetoric along the way.
But this only serves to starve the public domain more, undermining the basic principles of copyright. With the system increasingly out of balance, self-enforcement becomes even less likely. The law is impossible to obey, and rarely enforced. So consumers make up their own rules, for better or worse, with expensive and unnecessary casualties piling up on both sides.
Eventually, consumers and creators find the right balance and the most effective forms of compensation, regardless of the industry's efforts to cut off their nose to spite their face.
Then along comes another disruptive technology and a new round of customer innovation, and the cycle starts all over.
Rights holders remain stubbornly parked in the same old spots, afraid that if they move their vehicles at all they'll be doomed to circling the block forever, unable to stop until they permanently run out of gas.
The rest of us, meanwhile, are happily enjoying our flying cars.
The United Nations recently announced the lateset members to its "multistakeholder advisory group" on the issue of "internet governance." As they state, there are 56 members in the group, 33 of which are new. Considering that this is a group that is supposedly planning to act as stakeholders for "governing" the internet, you would hope that it would actually be representative of, you know, internet users. In fact, the press release from the UN states:
"The Advisory Group members are from all stakeholder groups and all regions, representing Governments, the private sector, civil society, academia and technical communities."
But when you look down the actual list, a different story appears. It looks like the list is pretty much dominated by government "IP" officials, as well as people from telcos, and then people in the domain name registration field. And then there's an exec from the world's largest patent trolling firm, Intellectual Ventures. Oh, and the VP of Global Public Policy Europe for Disney. Because I'm sure we're all comfortable letting Disney determine how the internet should be governed. Are these really the people we want "governing" the internet? There is at least someone from ISOC (the Internet Society), but I'm having a hard time seeing this as a group of people who should actually represent the public in terms of "governing" the internet.
When the MPAA came out with its annual report about the movie market worldwide, it showed that China was a huge growth market. However, now it appears that perhaps some of that growth was the result of Hollywood studios bribing Chinese officials. For years, China has limited how many Western movies can be released in the country. While Hollywood loves to decry all of the "piracy" in China, much of it is due to the fact that the movies can't be released there under the law. That's a situation where the problem is not piracy, nor the MPAA itself (even as it whines about Chinese piracy), but local laws. However, there has been a loosening of those restrictions lately -- and the SEC is exploring whether or not that came about due to bribes from the studios:
The Securities and Exchange Commission has sent letters of inquiry to at least five movie studios in the past two months, including News Corp's 20th Century Fox, Disney, and DreamWorks Animation, a person familiar with the matter said.
The letters ask for information about potential inappropriate payments and how the companies dealt with certain government officials in China, said the person, who was not authorized to speak publicly about the letters.
That said, there is an interesting tidbit in the Reuters article about all of this, that really serves to highlight how ridiculous the MPAA's fight against "piracy" is. It shows that despite the fact that piracy is rampant for Hollywood movies -- once the MPAA was able to get legit movies into the country, people flocked to the theaters. In other words, despite the cheaper pirated options -- or even free options -- people have no problem paying for the legit product when it's offered in a quality fashion:
China's booming middle class is increasingly willing to pay tickets prices for a cinema experience, forgoing cheap pirated DVDs and free internet downloads.
Once again, this seems to demonstrate why the problem is not piracy. If consumers are offered what they want in a reasonable manner, they are more than willing to pay -- and the Hollywood studios seem to recognize this implicitly (which is why they may have bribed Chinese officials to release authorized versions in that market, even with "piracy" being so common).
After the US shutdown of Megaupload, we noted that there were serious issues with the indictment, in that the US Attorneys seemed to make all sorts of leaps of logic to make their case, and it suggested that they had come into the case with a pre-determined idea (take the site down), and then cherry picked and distorted evidence to make the case. For example, we noted that the indictment used the lack of a search engine on Megaupload to indicate that it was a "criminal conspiracy," because it was "hiding" the infringement on the site. But that made little sense, considering that previous cases had found that having a search engine was an indication of inducement, and made a site against the law. The US government seemed to be saying that having search is inducement, but not having search makes you a conspiracy. That's crazy.
Kim Dotcom is continuing to make his case publicly, sharing a bunch of details of why he's confident that he'll win and why the US Government's case is wrong. In particular, he takes aim at the claims that he's guilty of direct infringement for uploading and sharing some songs. He claims that the government misses the fact that he uploaded songs he owned, but he never actually shared them publicly:
“A link distributed on December 3, 2006 by defendant DOTCOM links to a musical recording by U.S. recording artist ’50 Cent’. A single click on the link accesses a Megaupload.com download page that allows any Internet user to download a copy of the file from a computer server that is controlled by the Mega Conspiracy,” the indictment reads.
Dotcom told TorrentFreak that the file in question wasn’t infringing at all. He explained that he actually bought that song legally, and that he uploaded the file in private to test a new upload feature. He quickly picked a random file from his computer, which turned out to be this song.
“The link to the song was sent using the private link-email-feature of Megaupload to our CTO with the file description ‘test’. I was merely testing the new upload feature,” Dotcom said.
“The URL to this song had zero downloads. This was a ‘private link’ and it has never been published,” he added.
That raises questions about whether or not you can upload your own music for private use -- but given things like Google's Music locker and Amazon's music locker, it seems that lots of companies let you do something quite similar. That said, I would imagine the government's response is just the fact that such a system lets you offer up "private links" means that it's a form of distribution. However, it does make the government's case a little trickier.
Separately, Dotcom reveals that the large movie studios, who were the key source pushing for the indictment in the first place, were eager to work with Megaupload and the company had relationships with many of those companies. There are full emails there, including Disney offering up an alternative agreement to Mega's terms of service, and Warner Bros. asking for easier ways to upload its content (and talking about being able to share key movie content). The WB email is pretty damning:
Hello Megavideo,
My name is Joshua from the Warner Bros. Advanced Digital Services department.
I would like to know if your site can take a Media RSS feed for our syndications.
We would like to upload our content all at once instead of one video at a time.
Thank you for your time and funny content,
Joshua D. Carver
This is, certainly reminiscent of the revelation that while Viacom was freaking out over YouTube and suing, its marketing people were uploading tons of clips, and that Viacom was so confused that it actually sued YouTube over clips it had uploaded itself.
All that said, I still think that Kim Dotcom's decision to fight this in the press is a huge mistake. Even though he makes it out like he's fighting the MPAA -- and I'm sure they were absolutely behind much of this -- he's really fighting the US Attorneys, a part of the Justice Department, and they don't deal well with things like this. They can be incredibly vindictive and are focused solely on winning the case, not on what the public thinks. They'll use everything Dotcom says publicly and turn it against him.
Along those lines, for all the parallels discussed to the YouTube case, or even the Hotfile case, it's important to recognize the key difference. Those cases were civil cases between two private parties, where the end results could be injunctions or monetary awards over copyright infringement charges. Megaupload's founders are facing criminal conspiracy charges, which are an entirely different ballgame. Yes, the conspiracy charges are based on copyright infringement, but arguing solely about the copyright infringement part misses the main thrust of the government's case. The conspiracy charge is why they can do something ridiculous like claiming the lack of a search engine is evidence of a crime (even if having a search engine is evidence of inducement). Having all of this rest on the "conspiracy" charge means that the rules in this case are different, and the evidence just needs to show conspiracy -- not necessarily focus on the infringement aspects.
I think that Dotcom and his lawyers absolutely should be making these points in court to show that the conspiracy angle falls down when you scratch beneath the surface. Furthermore, they should probably be making the case that, at best, this should have involved a civil copyright lawsuit. But fighting a criminal conspiracy charge as if it's the same thing as a civil copyright infringement dispute is a mistake, and it's one that federal prosecutors will jump on and exploit strongly. Dotcom is right to point out that there's a serious conflict of interest in the fact that Neil MacBride, the former anti-piracy boss for the Business Software Alliance, is leading the case against him -- but arguing that right now isn't going to do him any favors. MacBride is a smart guy, and he'll use all of this against Dotcom.
I think there are a lot of serious issues raised by this case, and I think the government has massively overreached in its indictment. But I do worry (quite a bit) that Dotcom's decision to take his arguments to the press first may backfire and could taint the case, where having strong legal arguments to counter the government's questionable claims are really really important.
You may recall a lawsuit we wrote about last year, involving some questions about which parts of The Wizard of Oz movie were public domain, and which were still under copyright. It's a bit confusing. The books are public domain, having first started being released in 1899. No doubt about that. But the movie, made in 1939, is still under copyright. And here's the tricky part: which parts do the copyright cover? Technically, things directly from the book should be public domain -- but any creative additions put into the movie (such as the ruby red slippers...) can be covered by copyright, and held by Warner Bros.
So, here's the problem. Disney (not WB) has decided that it's going to make a movie out of The Wizard of Oz -- which it has titled Oz, the Great and Powerful. And it appears that WB wants to do everything possible to make life hellish for Disney if it moves forward on this plan. The first step? According to Eriq Gardner over at THResq, it was to quietly apply for a trademark on "The Great and Powerful Oz." Note the similarity to what Disney has called its movie. Except, it turns out Disney was sitting pretty... having filed for a trademark on its version of the phrase/title... a week earlier. Thus, Disney has the lead here and WB's application got tossed.
The THResq piece questions if WB was planning to make wider use of trademark to try to prevent things like this from happening, avoiding the fact that the copyrights on the works have long gone into the public domain.
In the past year, Warners has been one of the most aggressive filers of oppositions at the USPTO's Trademark Trial & Appeal Board. Especially over The Wizard of Oz.
For instance, the company has gone after potential merchandise associated with Dorothy of Oz, a $60 million-budgeted animation film scheduled to be released later this year by Summertime Entertainment.
Warners also has attacked registrations on a series of neuroscience books entitled "If I Only Had A Brain," a restaurant called "Wicked 'Wiches Wickedly Delicious Sandwiches," a clothing line known as "Wizard of Azz," Halloween costumes under the brand name "Wicked of Oz," and dozens of other Oz-related marks.
It goes on to talk about one ongoing case in particular, concerning a company selling wines in Kansas that it's named after aspects of the Wizard of Oz. The company is claiming (correctly) that the book is in the public domain. But WB is claiming it doesn't matter, because public domain only applies to copyright.
While that case continues, you can bet that WB won't let Disney just go ahead and make this movie without putting up a bigger fight.
Five years ago, we wrote about Gary Friedrich, the creator of the comic book character Ghost Rider, and how he was suing tons of companies, claiming that the copyrights associated with Ghost Rider had reverted back to him in 2001. As we noted at the time, there were some questionable things about his lawsuit -- including the fact that he waited years until after a movie and video game had been created and released before suddenly going legal about it. However, apparently Marvel (owned by Disney), in its ultimate vindictiveness, turned around and countersued Friedrich and won, leading to a ridiculous situation: Friedrich, who is broke, is now supposed to pay Marvel $17,000 for Ghost Rider merchandise he had sold in the past. He also isn't supposed to say that he's the co-creator of Ghost Rider any more if saying so involves him getting any kind of commercial advantage.
The full ruling in the case makes it clear that Friedrich's copyright claims were suspect in the first place, as it appears he clearly handed over the copyrights on the character to Marvel. The legal stipulation covers the specific terms, including the $17k payment, and the injunction against using the words "Ghost Rider" in connection with the sale of any goods, merchandise or services (i.e., "pay to get the signature of the creator of Ghost Rider!").
While Friedrich appears to have clearly overreached in his initial claim, the vindictiveness of Marvel/Disney is pretty ridiculous here. There's simply no reason for the company to demand $17k from a broke Friedrich, and (on top of that) make it that much harder for him to actually earn the money to pay them. As some are pointing out, you should remember this story the next time big companies claim they want to strengthen copyright law to "protect the content creators."
