50 Million US Homes Can't Get 25 Mbps From More Than One ISP

from the who-needs-competition? dept

We've talked for a while how while there has been a lot of hype placed upon the nation's scattered but modest deployment of gigabit networks, broadband in countless parts of the country is actually getting significantly-less competitive. That's thanks in large part to the nation's phone companies, which have increasingly refused to pony up the necessary costs to upgrade their aging DSL networks at any scale. Instead, many have shifted their focus either to enterprise services, or as in the case of Verizon, into trying to peddle ads to Millennials after gobbling up AOL and Yahoo.

As a result, cable has established a growing monopoly over broadband across massive swaths of the country. This reduced competition has resulted in rampant price hikes (usually in the form of hidden surcharges or arbitrary and unnecessary usage caps and overage fees). But it also has eliminated any real incentive to keep rates low or repair what's statistically some of the worst customer service in any industry in America.

A new study by several consultants for the broadband industry offers a little more insight into the real-world result of the sector's ongoing competition problem. According to the report by Economists Incorporated and CMA Strategy Consulting, there's a fairly staggering number of broadband consumers that don't see any real competition whatsoever, especially at the FCC's standard definition of broadband (25 Mbps down, 3 Mbps up):

"More than 10.6 million US households have no access to wired Internet service with download speeds of at least 25Mbps, and an additional 46.1 million households live in areas with just one provider offering those speeds, a new analysis has found. That adds up to more than 56 million households lacking any high-speed broadband choice over wired connections. Even when counting access to fixed wireless connections, there are still nearly 50 million households with one 25Mbps provider or none at all."

So it should be noted here that these estimates are likely optimistic. FCC data has previously suggested that this number is even higher, former FCC boss Tom Wheeler stating that around 80% of homes can't get access to the agency's standard definition of broadband. It's notably worse in rural or tribal areas. But even this week's new, toned down report by industry consultants doesn't paint a particularly pretty picture. Even at slower broadband speeds, you'd be hard pressed to identify anything close to reasonable competition:

"There were 31.1 million households with exactly one wireline provider offering speeds of at least 10Mbps, and another 6.9 million households with zero providers offering such speeds over wired connections. At the paltry level of 3Mbps download speeds, 19.3 million households had access to one wireline ISP and 4.9 million households had no access at all."

It should be noted that one of the co-authors of the report, Hal Singer, has a bit of a history creatively-massaging data at the industry's behest -- especially when it comes to trying to vilify net neutrality (which the 45-page report seems to avoid talking about). So while Singer's ability to candidly acknowledge a lack of competition is a little surprising (even though the report does try to scale back previous FCC estimates on this front), less surprising is the authors' proposed solution to the broadband industry's broadband deployment and competition shortcomings: the magical wand that is telecom sector deregulation.

So again, the report is quick to avoid the debate over the current administration's decision to kill consumer privacy protections and gut net neutrality, despite Singer being a major player in trying to make the latter happen. And while it pays some lip service to competition, it fails to acknowledge how cable's growing monopoly and outright telco apathy are making competition problems worse. The report however does try to claim that several, less talked about FCC initiatives are going to expand fiber and competition to an additional 26.7 million homes:

"In two recent Notices of Proposed Rulemakings (“NPRMs”), the FCC has outlined a range of potential actions to make it faster and less costly to deploy next-generation networks. It is expected that these proposals will lower pole-attachment costs, reduce the time and cost of make-ready, reduce barriers to copper retirement, accelerate legacy time-division multiplexing (“TDM”) product discontinuance, and reduce barriers to locating and deploying wireless infrastructure.

The telecom industry has insisted for decades that if you remove all regulatory oversight, competition and connectivity will magically spring forth from the sidewalks, bathing us uniformly in dirt-cheap, ultra-fast connectivity. Of course that never happens because reality is notably more complicated, and each piece of regulation (especially in an industry where incumbent legacy giants are usually quite-literally writing the laws) needs to be weighed on its actual merits. When you just blindly "deregulate" a sector that suffers from both regulatory capture and limited competition, history tells us you don't get a miracle -- you get Comcast.

What most people also don't seem to understand is that when the telecom industry pushes for "deregulation," what it actually means is passing regulation it writes. And, historically, that regulation unsurprisingly makes life easier for wealthy, entrenched duopolists, but makes life substantially harder on the smaller competitive upstarts that lack the same lobbying and campaign-contribution firepower. It's generally how they get partisans who adore the concept of killing burdensome regulations (because yes, there is plenty of that) into cheering against their own best self interests. And it has been a smashing success for decades. Your Comcast bill surely agrees.

So while the report is correct that things like utility pole attachment reform is important for fiber deployment, it fails to mention that cities that have attempted to do so have been sued by Comcast, Charter and AT&T to try and slow competitive threats. Similarly, while the report is quick to emphasize the importance of "reducing barriers to copper retirement," it fails to mention that AT&T and Verizon's version of this involves severing the taxpayer-subsizied DSL connections of millions of users (many elderly), and just shoving them toward notably-more expensive wireless (assuming it's even available).

So yes, some of these efforts -- in an ideal world -- could speed up deployment. But because we've let industry giants quite literally infect government (including surveillance) on a bone-marrow level, actually implementing any regulatory or deregulatory policies that improve competition simply doesn't happen -- because it would reduce sector revenues. Consultants predominantly paid by the industry aren't likely to admit this, but as somebody having spent the better part of a lifetime tracking this sector I can assure you: none of the competition, coverage and service problems in telecom are going to be fixed until we somehow lessen Comcast, AT&T, Charter and Verizon's influence over state and federal politics.

Filed Under: access, broadband, competition, fcc

Confidence Wavers In Google Fiber As ISP Cancels Installs, Refuses To Explain Why

from the nothing-to-see-here dept

Late last year Google Fiber announced it would be pausing expansion into several new markets, axing its CEO, and shuffling a number of employees around. Reports subsequently emerged suggesting that Alphabet higher ups were growing frustrated with the high cost and slow pace of fiber deployment, and were contemplating an overall larger shift to wireless. While the company continues to insist that there's nothing to see here and that everything is continuing as normal, signs continue to emerge that the ground Google Fiber is built on may not be particularly sturdy.

This week numerous Kansas City residents say they were told that the company was cancelling their installations after waiting eighteen months for service. Users there are frustrated by Google's complete lack of explanation for the rash of cancellations:

"About April, May, I saw sometimes as many as four to five Fiber trucks in the neighborhood. I kept watching my email but never got anything in the mail to schedule my appointment or anything,” Muerer told 41 Action News.

That was back in October 2015.

Eighteen months later, Meurer still doesn’t have Google Fiber. He recently received an email saying the company had canceled his installation.

"I’m left wondering what is going on,” said Meurer.

Kansas City residents aren't alone. Portland was one of the cities Google Fiber was supposed to launch in, but locals there are similarly frustrated by Google's about face. Especially since the city had shuffled around city ordinances, laid the groundwork for the placement of Google Fiber "huts," and convinced state legislatures to pass a new state law providing notable tax incentives for Google Fiber. Chicago, Jacksonville, Los Angeles, Oklahoma City, Phoenix, San Diego, San Jose, and Tampa were also in various states of contact with Google Fiber about potential builds that apparently will no longer be happening.

And while Google Fiber still exists, Google/Alphabet isn't helping restore confidence it the disruptive potential of the service. By and large the company continues to insist that everything is fine and there's nothing to see here despite ongoing evidence of cold feet at the executive level. Whenever press outlets inquire about last fall's decision, reporters are given a calorie-free rosy statement that tells people absolutely nothing substantive about what's going on. This statement, for example, is what I was given when I asked the company specifically why it was cancelling fiber installations in Kansas City:

"Google Fiber loves Kansas City and is here to stay. We’ve been grateful to be part of your community since 2011, and for the opportunity to provide superfast Internet to residents. We recently announced our expansion into Raymore, we are continuing to build in Overland Park, and we can’t wait for even more customers in Kansas City to experience what’s possible with Google Fiber."

Ars Technica received a similar non-answer from the company.

Granted Google's pivot to wireless could certainly work. The company is conducting wireless trials in the 71-76 GHz and 81-86 GHz millimeter wave bands, as well as the 3.5 GHz band, the 5.8 GHz band and the 24 GHz band. It seems fairly clear that Alphabet executives really don't know what they want to do just yet, but don't want to admit that to anybody. But confidence that Google Fiber would be the answer to solving the broadband mono/duopoly log jam is quickly wavering, something unaided by Google's bizarre refusal to be clear about the direction the project is headed.

Filed Under: access, cancelled, fiber, google fiber, installs, kansas city
Companies: alphabet, google

Top UK Cop Says Hackers Should Be Punished Not With Prison, But With Jammed WiFi Connections

from the yeah,-that'll-work dept

Here's a story that starts out well. One of the UK's top police officers, Chief Superintendent Gavin Thomas, has said that putting people in prison for offenses like hacking into computers makes no sense. He points out that it costs around $50,000 a year to keep someone in a traditional prison, and that education programs are likely to be a far more cost-effective solution, especially in terms of reducing recidivism. This is absolutely right, and it's great to hear a senior officer admit it. Unfortunately, things go downhill from here. He told the Telegraph:

If you have got a 16-year-old who has hacked into your account and stolen your identity, this is a 21st century crime, so we ought to have a 21st century methodology to address it.

His solution is as follows:

He said convicted criminals could be fitted with electronic jammers around their wrists or ankles which blocked wifi signals and prevented them from going online.

Leaving aside the human rights implications, which to his credit Thomas acknowledges, there is another big problem with the proposal, as Techdirt readers have doubtless already spotted. The people wearing these WiFi jammers would be those who have been found guilty of some computer-related crime. By definition, then, they are likely to be tech-savvy. So they probably have other computers that can use Ethernet connections to access the Internet. In addition, they are unlikely to have any problems using Bluetooth or a USB cable to reverse-tether their mobiles to a system with wired access. The more adventurous might even try to rig up some kind of Faraday shielding to jam the jammer. In other words, this isn't going to work, but would probably cause havoc with everyone else's WiFi connections.

Back in 2015, Thomas was quoted by Computer Business Review on the topic of encryption, and the problems it posed for the police, when he said:

It is utterly essential for detectives and criminal investigators to use data held on smartphones and other devices when they are investigating serious crimes.

Given his belief that jamming bracelets would stop convicted computer criminals from using the Internet, the worry has to be that he shares the mistaken view that tech companies can create a safe system of crypto backdoors or "golden keys" that only the authorities can use. Let's hope he takes some expert advice before offering an opinion on that one.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: access, gavin thomas, hackers, jail, law enforcement, punishment, uk, wifi

Google's Larry Page Got Bored Of Disrupting The Telecom Sector With Google Fiber

from the flying-saucer-shit dept

Back in October Google Fiber confirmed that all was not entirely well at the disruptive broadband provider. The company announced that not only would it be shaking up its executive leadership, it would be eliminating some Google Fiber employees and putting a hold on fiber deployment to around nine cities (existing builds will continue, however). There were several reasons for the shift, the biggest being that the company wasn't happy with the time it was taking to build networks from scratch, and was considering a notable pivot to next-generation wireless to save both time and money.

But subsequent reports have suggested there's a notable split among Google/Alphabet executives as to the future direction of Google Fiber. Bloomberg recently unveiled some additional new details on this, noting how part of the underlying issue is that Alphabet CFO Ruth Porat has been engaged in some purse string tightening at the Mountain View giant. But the report also touches on the fact that Larry Page apparently grew tired of the slow pace of disruption in the telecom space because digging ditches isn't "flying saucer shit":

"But seeking permits to lay fiber is time-consuming and digging holes expensive. Former employees say Page became frustrated with Fiber’s lack of progress. “Larry just thought it wasn’t game-changing enough,” says a former Page adviser. “There’s no flying-saucer shit in laying fiber.” In October the company announced that it was dismissing around 130 staffers and halting the expansion of the fiber network in eight cities. Barratt resigned that same day."

In addition to navigating a labyrinthine maze of antiquated underground urban infrastructure, Google Fiber has faced all manner of delays caused by incumbent broadband providers like AT&T and Comcast, who work tooth and nail to hamstring Google Fiber and other competitors. From protectionist state laws intended to prevent cities from striking public/private partnerships, to attempts to prevent Google Fiber from quick access to utility poles, these companies have decades of experience using cash-compromised state legislators and regional regulatory capture against would-be competitors.

But this is all stuff Google Fiber knew full well before throwing its hat into the telecom arena. And while Page may not think that providing a desperately needed alternative to the existing broadband duopoly is "flying saucer shit," Google Fiber's impact on the market has been transformative all the same. Even with Google Fiber's admittedly sparse footprint, the mere presence of the service results in ISPs dramatically dropping prices and boosting their own deployments of gigabit service. Google Fiber's mere existence also created a necessary national dialogue on the sorry state of U.S. broadband competition.

Previous reports have suggested that executives at Google were split over Google Fiber, with some wanting the company to stay the path with fiber, and many others believing that wireless will be good enough. But the Bloomberg report is quick to highlight how many also worry this is just the latest example of Google's inevitable shift from risk-taking disruptor, to a notably blander legacy-turf-protection machine:

"These changes have prompted many in Silicon Valley to accuse Page of bowing to investor pressure—in other words, of acting like a CEO of a normal, publicly traded company. “It definitely looks like a more conventional company,” says Randy Komisar, a partner at Kleiner Perkins Caufield & Byers. “It’s the classic GE conglomerate model,” he says, comparing Page to Jack Welch, famous for turning General Electric around by shedding research divisions and slashing costs."

With the incoming Trump administration making it very clear the goal is to defang and defund the FCC, Google Fiber's path could get even more complicated in the form of fewer regulatory allies in the fight against incumbents. While the Google Fiber shift to wireless could still pay notable competitive dividends, it's still entirely within the realm of possibility that Page and friends get bored with Google Fiber entirely in a few years, leaving the effort as just another footnote in the never-ending quest to bring something vaguely resembling real price competition to bear on Verizon, AT&T, Comcast and Charter.

Filed Under: access, broadband, competition, fcc, google fiber, larry page, moonshots
Companies: google

You Have To Distort The Facts Pretty Badly To Argue That Google & Facebook Are Worse For Consumers Than AT&T

from the just-sayin' dept

We've had our run-ins with Jonathan Taplin before. The quintessential OMYAC of the legacy entertainment industry, who is so obsessed with the nefarious things he insists Google and Facebook are doing (even though he's often flat out wrong), is back in the pages of the NY Times, arguing that regulators shouldn't be so concerned about AT&T, when they should be attacking Google and Facebook instead.

Taplin kicks it off by jumping on Mark Cuban's ridiculous comments from last week saying that AT&T should be able to buy Time Warner so that it can "compete" against Google and Facebook, and then takes it to an even more ridiculous level. The crux of Taplin's argument: Google and Facebook are big, and thus bad, and need antitrust treatment.

Look at the numbers. Alphabet (the parent company of Google) and Facebook are among the 10 largest companies in the world. Alphabet alone has a market capitalization of around $550 billion. AT&T and Time Warner combined would be about $300 billion.

Yup. They're big companies -- and certainly, like with all big companies, we should be wary about how they might abuse their powers. But big, by itself, isn't automatically bad. And the nature of antitrust is not that big is bad, but that abusing monopoly power is bad. And Taplin has no way to show either (1) monopoly power or (2) abusive behavior, so he just starts throwing numbers.

Alphabet has an 83 percent share of the mobile search market in the United States and just under 63 percent of the US mobile phone operating systems market. AT&T has a 32 percent market share in mobile phones and 26 percent in pay TV. The combined AT&T-Time Warner will have $8 billion in cash but $171 billion of net debt, according to the research company MoffettNathanson. Compare that to Alphabet’s balance sheet, with total cash of $76 billion and total debt of about $3.94 billion.

Nice cherry picking, Jonathan! The real scam in fake antitrust complaints is trying to define the markets in a way that looks much worse than it really is. Notice that Taplin focuses on "mobile search" (random?) as the market for Google and "mobile phones" for the market for AT&T. But he leaves out the simple facts: if you need an internet connection, in many cases AT&T is either your only option or one of two options. And if you do that, AT&T gets to see everything you do. And switching broadband providers or mobile phone providers is a complicated and often expensive process. Switching a search engine... is not.

Then, to get to the question of "bad behavior," Taplin falls back on the silly line that because Google and Facebook have made a lot of money, and his buddies in legacy entertainment companies have been making a lot less money, that somehow Google and Facebook have unfairly taken money from his industry. That's just silly.

In the past decade, an enormous reallocation of revenue of perhaps $50 billion a year has taken place, with economic value moving from creators of content to owners of monopoly platforms.

I reached this conclusion from the following statistics: Since 2000, recorded music revenues in the United States have fallen to $7.2 billion per year from $19.8 billion. Home entertainment video revenue fell to $18 billion in 2014 from $24.2 billion in 2006. United States newspaper ad revenue fell to $23.6 billion in 2013 from $65.8 billion in 2000.

And yet, by every available metric, people are consuming more music, video, news and books. During that same period, Google’s revenue grew to $74.5 billion from $400 million.

Sing it with me, folks: correlation is not causation. After all, the number of works of visual art copyrighted in the US similarly has an inverse correlation to the number of females in NY who slipped or tripped to their death (really!). It doesn't mean it's a causal relationship where more of one means less of the other.

The reason that Google and Facebook are making lots of money is because they're offering a product that people want and they're doing it for free and have come up with business models that work. The reason legacy entertainment companies are flailing (and, realistically, only some of them are), is because they tried to stick with their old business model that focused on basically ignoring or mocking and attacking competition from new sources.

The problem, in short: Taplin's whole world revolved around elitism and gatekeepers. The business models he celebrates are gatekeeper business models -- the ones that keep out the riff raff and the people that Taplin likes to insult because he thinks their "art" isn't good enough to be seen by the world. The world of the internet is the opposite. It's about enabling anyone to be a creator, and to open up new avenues to create, to share, to promote, to distribute, to build a fan base and to monetize. Those were all functions that Taplin and his friends used to control, with a strict lock on the gate, allowing them to artificially inflate the prices. When the new platforms came on the market and democratized every bit of the process of creating/distributing content, suddenly the "deal" offered by the gatekeepers didn't look so good. And that's why those busineses have struggled.

And it's why, comparatively speaking, most of the public likes companies like Google and Facebook, while they hate AT&T. Find me a list of consumer satisfaction or most admired companies where AT&T outranks either of the other ones. Antitrust should be about protecting consumers -- and the public is pretty happy with the services it gets from Google and Facebook... but not so much with AT&T.

But, of course, to Taplin, it all comes back to piracy, because he's absolutely sure that's why everyone uses Google and Facebook, even though he's wrong.

Every pirated music video or song posted on YouTube or Facebook robs the creators of income, and YouTube in particular is dominated by unlicensed content. Google’s YouTube has an over 55 percent market share in the streaming audio business and yet provides less than 11 percent of the streaming audio revenues to the content owners and creators. But Facebook, which refuses to enter into any licensing agreement on music or video, is challenging YouTube in the free online video and music world.

As we discussed a few months ago, when you look at the actual data, only 2% of music video views on YouTube are unauthorized. 2%. So, no, YouTube is not "dominated by unlicensed content." That's simply and utterly false. And, no, even those unauthorized videos are not "robbing creators of income." Many smart creators these days are using YouTube as a platform to get more fans and build a bigger support base, which they can take to platforms like Patreon or Kickstarter, rather than having to give up everything to sign with a major label run by one of Taplin's friends.

I recognize that Taplin's friends have struggled to understand and adapt to this new world. And I understand that they want to lash out at the big companies like Google and Facebook that have helped make this world a reality. But why does the NY Times keep letting him publish blatantly factually false information? Oh, and the kicker? After a long rant that is full of misleading buillshit... he asks for "an honest national conversation."

Perhaps in January we can have an honest national conversation on monopoly and our future.

If we were to have an honest conversation, it would have to leave out Taplin's lies.

Filed Under: access, antitrust, business models, correlation, internet, jonathan taplin, monopoly, social media
Companies: at&t, facebook, google

Google Fiber Announces Layoffs & Deployment Pause, Will Likely Pivot To Wireless

from the build-it-and-they-won't-come dept

Back in August a report emerged claiming that Google Fiber executives were having some second thoughts about this whole "building a nationwide fiber network from the ground up" thing. More specifically, the report suggested that some executives were disappointed with the slow pace of digging fiber trenches, and were becoming bullish on the idea of using next-gen wireless to supplement fiber after acquiring fixed wireless provider Webpass. As such, the report said the company was pondering some staff reductions, some executive changes, and a bit of a pivot.

Fast forward to this week when Access CEO Craig Barrett posted a cheery but ambiguous blog post not only formally announcing most of these changes, but his own resignation as CEO. According to Barrett, Google will continue to serve and expand Google Fiber's existing markets (Austin, Atlanta, Charlotte, Kansas City, Nashville, Provo, Salt Lake City, and The Triangle in North Carolina), and will also build out previously-announced but not yet started efforts in Huntsville, Alabama; San Antonio, Texas; Louisville, Kentucky; and Irvine, California.

From there, the direction Google Fiber will be headed gets murky. According to Barrett, Google has paused (read: killed) potential deployments in cities where Google Fiber had been having conversations, but hadn't yet given the green light for full deployment (Portland, Chicago, Jacksonville, Los Angeles, Oklahoma City, Phoenix, San Diego, San Jose, and Tampa). Most of the layoffs will be in these cities, notes Barrett:

"For most of our “potential Fiber cities” — those where we’ve been in exploratory discussions — we’re going to pause our operations and offices while we refine our approaches. We’re ever grateful to these cities for their ongoing partnership and patience, and we’re confident we’ll have an opportunity to resume our partnership discussions once we’ve advanced our technologies and solutions. In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base."

A report over at Bloomberg notes that about 9% of employees at Access (which covers multiple projects, not just Google Fiber) will be let go, which is notably fewer staff reductions than last summer's report had suggested. Bloomberg's insiders also claim that there have been some rifts among executives at Google/Alphabet/Access over whether to remain dedicated to the laborious process of fiber installations, or to pivot more completely to wireless:

"Moving into big cities was a contentious point inside Google Fiber, according to one former executive. Leaders like Barratt and Dennis Kish, who runs Google Fiber day-to-day, pushed for the big expansion. Others pushed back because of the prohibitive cost of digging up streets to lay fiber-optic cables across some of America’s busiest cities."

That there's some hesitation isn't surprising. Not only is building a fiber network from the ground up incredibly hard, expensive, and time consuming, the telecom industry is awash with deep pocketed incumbents intent on making things as difficult as possible for competitors like Google Fiber (and downright impossible for smaller ISPs). From AT&T suing cities to thwart attempts to streamline utility pole attachments, to incumbent ISPs writing awful state law prohibiting public/private partnerships, telecom can certainly be a cesspool of protectionism of the worst sort.

While these incumbent ISPs (and their armies of paid policy mouthpieces) will likely spend the next few weeks celebrating the "death of Google Fiber," there's nothing stopping the company from pivoting to next-generation wireless. Google has filed applications with the FCC to conduct trials in the 71-76 GHz and 81-86 GHz millimeter wave bands, and is also conducting a variety of different tests in the 3.5 GHz band, the 5.8 GHz band and the 24 GHz band. That said, it certainly remains possible that at some point Google gets tired of ramming its head against VerizoCasT&T and sells the project off in a few years, leaving us with another sad historical footnote in the often pitiful national quest for something vaguely resembling broadband competition.

Filed Under: access, broadband, competition, fiber, wireless
Companies: access, alphabet, google

Lessons From Prince's Legacy And Struggle With Digital Music Markets

from the innovative,-but-controlling dept

Undeniably, Prince’s death last week marked the loss of a true musical genius and maverick. In his life, he was known for being a talented musical innovator with flamboyant clothes and a contrarian streak. He was adept at a range of instruments, as well as in multiple genres of music including funk, jazz, pop, rock, and R&B.

As broadly gifted an artist as he was, Prince never quite found the right approach when it came to licensing his music for distribution -- in spite of the fact that sold over 100 million records, placing him among the best-selling artists of all-time. He won an Oscar, a Golden Globe, and seven Grammys, among other accolades. His massive discography includes 50 albums, 104 singles, 136 music videos, among other creative works. And yet his fans were left in the odd position, on the news of his death, of being frequently unable to provide links to Prince’s massive oeuvre.

Like David Bowie, who died only a few months earlier this year, Prince was constantly reinventing himself throughout his career. But one key reason for his reinvention -- at different times, he was known by “Prince,” “Jamie Starr,” an unpronounceable glyph, and perhaps most notoriously, as “The Artist Formerly Known as Prince” -- was his unhappiness with his record labels, and later with digital/Internet distribution.

And even now, if you’re looking to listen to your favorite Prince tracks on popular digital music services like Spotify or Apple Music, you’re out of luck. While you can find some live performances on YouTube, and a couple exceptions like his single “Stare” on Spotify, the streaming rights to his music are licensed exclusively through Tidal -- a niche subscription-only service owned by Jay Z.

You can see why Prince may have been attracted to Tidal as a service. Since its launch in late 2014, a number of major artists have embraced it, offering exclusive releases and touting the service’s better deal for artists. Indeed, Tidal purports to “pay the highest percentage of royalties to artists, songwriters and producers of any music streaming service.”

But it’s hard to see how it would make business sense to exclusively license with them, as Prince did. For one thing, it’s not entirely clear that Tidal’s rates are that much better than Spotify. Respectively, they each claim to pay out 75% and 70% of their revenues to rights holders. Yet, Tidal has also claimed that they pay out four times Spotify’s royalty rate.

Vania Schlogel, then executive at Tidal, clarified their rates in an interview for the Hollywood Reporter

There was some confusion on the Internet about whether “royalty rate” was a percentage of Tidal’s total revenue. According to Schlogel, it is. The industry standard royalty rate, she says, is 70% (roughly 60% to record labels, roughly 10% to artists via publishers). Tidal pays 62.5% and 12.5% (which equals the 75% Jay Z is referring to).

This makes their base royalty rate going to artists 25% higher than Spotify. But Tidal also has about 45% of their subscribers on a $19.99 per month premium tier. This would make the share of revenue going to artists around 80% higher.

That’s a lot more! Artists should all be switching to exclusive deals with them, right? Well...not so fast. Spotify alone has 30 million paying subscribers. 100 million if you include ad-supported free tier listeners. Apple Music has another 11 million paid subscribers. Compare that with Tidal’s relatively paltry 3 million. Not to mention commercial distribution to YouTube’s 1 billion active users, or the dozen other streaming services out there.

Assuming those subscribers have comparable activity profiles, it wouldn’t make business sense even if they paid ten times the royalty rate -- at which point it would be more than total revenue. Although, artists can do whatever they want. It’s a free market (sort of).

But for Prince, his embrace of Tidal may not have been just about royalty rates. Rather, it may have been a reflection of his proclivity to assert tight control of his brand. As Vox’s Constance Grade writes:

It's classic Prince: Tidal is the best program not only because it pays better, but because it gives him the most control over his music and his persona. And Prince never let someone else control his persona if he could help it.

This was fully consistent with the character of a man who preferred to play small, intimate venues even when he could have been selling-out stadiums.

But making music less accessible poses serious challenges for artists and consumers alike. For one thing, as English singer/songwriter Lily Allen explains, it will reinvigorate incentives for piracy (notably, she has also had an interesting relationship with Techdirt):

I love Jay Z so much, but Tidal is (so) expensive compared to other perfectly good streaming services, he's taken the biggest artists ... Made them exclusive to Tidal (am I right in thinking this?), people are going to swarm back to pirate sites in droves ... Sending traffic to torrent sites.

Perhaps unsurprisingly, when Kanye West decided to release his album The Life of Pablo exclusively on Tidal, it was pirated over 500,000 times in its first day alone -- drawing fire for reinvigorating online music piracy.

A recent study by Columbia University (among other research including the Copia Institute’s “The Carrot Or The Stick?”) confirms that providing access to good legal alternatives is effective at reducing online piracy -- particularly among young people. To take another example, the rise of Spotify in Sweden was followed by a major decline in music sharing on the Pirate Bay. According to Copia’s study, “a similar move was not seen in the file sharing of TV shows and movies...until Netflix opened its doors in Sweden.”

During his career, Prince also flirted with various album release strategies, and explored ways to cut out the middleman by going fully independent.

Prince’s strategy was visionary, but ahead of its time. A solution that’s just now coming of age is blockchain-driven smart contracts for digital music consumption. If they catch on, they could cut out the middleman and transparently distribute revenues directly to artists behind a given work, according to pre-arranged terms. Prototype service Ujo is already doing it with artist Imogen Heap’s single “Tiny Human.” So, in actuality, perhaps Jay Z should be more worried about blockchain than Spotify.

Indeed, as streaming becomes the dominant revenue source in the music market, and consumers continue to shift away from physical media and digital downloads, the pressure from artists will only increase as they seek more transparency, and a stronger ability to renegotiate their share of revenues from all sides (but particularly from labels).

On Twitter, Allen echoed this sentiment, writing that rather than demonizing streaming services, artists should look towards the hefty cut of revenue taken by labels:

For Prince, online streaming services were just the latest challenge in his complex relationship engaging with evolving digital markets. Like Bowie, Prince was a digital pioneer -- among the first to embrace the Internet’s potential to create a direct relationship with his fans. In 2001, he opened one of the first music subscription services, NPG Music Club, which was open for 5 years. In 2009, this was succeeded by lotusflow3r.com. As the Wall Street Journal describes it:

LotusFlow3r.com, resembled a galactic aquarium, featuring doodads like a rotating orb that played videos. The promise: fans who ponied up $77 for a year-long membership would receive the three new albums, plus an ensuing flow of exclusive content, like unreleased tracks and archival videos.

It was also met with a mixed reception, and a year after its launch, it went dark.

Ultimately, as the Internet came of age, Prince met it with increasing resistance. Likely, he saw his ability to assert control slipping away. He wasn’t a fan of people repurposing his work in the analog era, so why should we expect him to embrace a digital one -- where it’s far easier to remix, edit, dub and repurpose? As Mike Masnick explains, Prince became a militant enforcer of his intellectual property, who played fast and loose with the law in his litigiousness:

He's also gone legal a bunch of times, suing a bunch of websites, threatening fan sites for posting photos and album covers on their sites, suing musicians for creating a tribute album for his birthday, issuing DMCA takedowns for videos that have his barely audible music playing in the background and 6-second Vine clips that are clearly fair use.

At one point, he even declared that the Internet is a fad, rebelling against a model that wouldn’t work on his terms:

The internet's completely over. I don't see why I should give my new music to iTunes or anyone else. They won't pay me an advance for it and then they get angry when they can't get it.

(At this point he could have styled himself “The Prince of Denial.” He even deleted his Facebook and Twitter accounts.)

Famously, Prince, via Universal Music, was responsible for the infamous “dancing baby” DMCA takedown over a video featuring Prince’s “Let’s Go Crazy” playing faintly in the background of a short clip as a toddler danced*. Ultimately our friends at EFF, who were representing Stephanie Lenz, prevailed on their fair use claim. In 2013, EFF awarded him their “Raspberry Beret Lifetime Aggrievement Award” for “extraordinary abuses of the takedown process in the name of silencing speech.”

Despite all the digital-copyright agitation Prince managed to generate in the steps he took to express his unhappiness with Internet distribution channels -- and despite his insistence, it doesn’t seem as if the Internet is “over” quite yet -- he will of course be remembered primarily for his genius as a songwriter, performer, and producer. And, also, as a visionary. Although he passed away just before the rise of virtual reality and mixed reality technologies, one can only imagine him as someone who would have embraced it. Even if imperfectly.

Ironically, given his virtuosity and lasting impact on pop music, limiting his digital distribution, and the ability of his fans to find new creative uses for his work, makes it orders of magnitude more difficult for fans to bring his music to new generations of listeners, who may never know what all the fuss about Prince was about. And that’s a shame.

* Post updated to reflect that while Prince/Universal sent the initial DMCA takedown, it was Lenz and EFF who brought the lawsuit for that takedown.

Filed Under: access, control, copyright, culture, exclusivity, fans, jay-z, kanye west, licensing, lily allen, music, prince, streaming
Companies: spotify, tidal, youtube

Democratic National Committee Punishes Bernie Sanders For Their Own Technical Mistake; Sanders Threatens To Sues

from the turmoil dept

There's a bizarre story about potential computer hackery this morning, involving the Democratic National Committee and the campaigns of Bernie Sanders and Hillary Clinton -- the two front runners on the Democratic side. Apparently, the DNC was doing some sort of upgrade to its computer systems, and in the process, there was a glitch that very briefly allowed a Sanders staffer, "data director" Josh Uretsky, to access confidential data from Hillary Clinton's campaign -- specifically confidential voter information gathered by Clinton's campaign. Uretsky realized he was able to access the data and did so -- and has apparently since been "fired." In response, the DNC has completely cut off all access to its systems to the Sanders' campaign, saying it won't allow the campaign back in "until it provides an explanation as well as assurances that all Clinton data has been destroyed."

And, now the Sanders campaign is threatening to sue the party, claiming that this move could undermine his entire political campaign.

Yes, accessing a competitor's data seems questionable, but again remember that the mistake here appears to be because of the DNC itself -- or, rather, its computer system vendor NGP VAN. If there's a problem, the DNC should take it up with NGP VAN who fucked up and made the data available across campaigns. That's a pretty big mistake, given the stakes. But to blame the Sanders campaign seems pretty questionable. Yet, the DNC apparently has decided to go full bore against the Sanders campaign instead of admitting to its own error:

DNC chair Debbie Wasserman Schultz weighed in with a statement of her own.

"Once the DNC became aware that the Sanders campaign had inappropriately and systematically accessed Clinton campaign data, and in doing so violated the agreement that all the presidential campaigns have signed with the DNC, as the agreement provides, we directed NGP VAN to suspend the Sanders campaign's access to the system until the DNC is provided with a full accounting of whether or not this information was used and the way in which it was disposed," she said.

In a separate interview, Wasserman Schultz further attacked the Sanders campaign:

“The Sanders campaign doesn’t have anything other than bluster at the moment that they can put out there,” she told CNN on Friday. “It’s like if you found the front door of a house unlocked and someone decided to go into the house and take things that didn’t belong to them.”

To some extent, this sounds like the ridiculous legal fights over the CFAA, over what is and what is not "exceeds authorized access" (just wait until the DNC files CFAA claims against the Sanders campaign...). But separate from that, it really looks like the DNC is not just playing favorites with the Clinton campaign here, but so actively trying to blame its own technical failures on the Sanders campaign as to make itself look ridiculous.

Update: Well, that didn't take long. The Sanders campaign has sued the DNC alleging breach of contract (Sanders and the DNC have a contract allowing the campaign access to the system) as well as negligence for letting NGP VAN screw things up so badly.

Filed Under: access, bernie sanders, campaigns, cfaa, debbie wasserman schultz, hillary clinton, voter info
Companies: democratic national committee, dnc

Brazilian Court Freaks Out, Briefly Shuts Down All Of WhatsApp, For Failing To Reveal Info On Users

from the that's-one-approach dept

As you may have heard, earlier this week, a judge in Brazil ordered that WhatsApp, the insanely popular messaging app owned by Facebook should be blocked from all of Brazil for 48 hours, after it refused to reveal some details on some criminals who had used the app. Another judge overturned the ruling soon after, and the app started to reopen to people in Brazil. The GlobalVoices link above has the details about how this came to be:

Much information that could help answer this question is being withheld from the public. But it appears to be linked to a criminal investigation of a man accused of drug trafficking, armed robbery and association with Brazil's largest criminal organization PCC. This investigation is being conducted in camera, or in secret, so no further details have been released.

In July and August 2015, Brazilian judiciary officials ordered WhatsApp to release personal data of users who were being investigated by the Federal Police. But WhatsApp, which is owned by Facebook, refused to release the data, according to the São Paulo Court of Appeals press release.

On December 16, the Brazilian Prosecutor's Office responded by ordering telecommunications providers to block WhatsApp altogether, affecting what the company estimates to be 100 million users in Brazil.

This seems like a fairly extreme reaction -- harming millions of users (a recent survey found that 93% of internet users in Brazil use WhatsApp) -- just because the company won't reveal info on one user. This is especially concerning because just last year we were happy to see Brazil pass a ground-breaking law, called the Marco Civil, to protect online rights (after years of debate over it).

However, the judge who agreed to block WhatsApp, Sandra Regine Nostre Marques, actually used a provision of the Marco Civil to justify the block:

The blocking motion was authorized by judge Sandra Regina Nostre Marques, who based her decision on a provision of Marco Civil, Brazil's so-called “Bill of Rights” for the Internet. The law establishes rules on network neutrality, privacy, data retention and intermediary liability, among other issues, and was approved by President Dilma Rousseff in April 2014.

The Marco Civil also allows state authorities to place sanctions on foreign Internet companies that refuse to comply with Brazilian legislation. As noted in Article 12 of the law, authorities can impose warnings, fines and temporary suspension of a company's services or activities. These penalties can be implemented only with a judge's approval.

The online human rights organization Access Now condemned the order and further argues that article 12 of the Marco Civil should be changed:

Even though it was temporarily overturned, the Sao Paulo court order is a troubling setback for Brazil since the country passed legislation known as the Marco Civil da Internet, a civil framework for the internet that gives legal status to a set of fundamental principles for digital rights for all Brazilians. One little-known clause in the Marco Civil — article 12 — permits penalties for companies that fail to respond to requests for data. Among the possible penalties, judges can apply warnings, temporary suspension of services, or even the prohibition to operate the service on the country. Judges can impose these penalties individually or jointly. We believe that article 12 is overbroad and disproportionate, violating a cornerstone of international law. The implementation of article 12 by the judiciary has drastic and unintended consequences that harm the ability to seek, receive, and impart information.

The decision by the higher court judge to issue a temporary injunction was based on the lack of proportionality between the wide scope block and the failure to comply with the July court order. But a temporary injunction does not serve as precedent for subsequent court cases under Brazilian law.

But, that may not happen as there's a lot of pressure in Brazil to go the other way unfortunately, as Eduardo Cunha, a leading Brazilian politician, and opponent to the Marco Civil has been gaining power.

Cunha, a former telco lobbyist, was one of the biggest opponents of Marco Civil (particularly its net neutrality clause) before the legislation made its way to Dilma’s desk and into law.

But a year later, he controls a Congress dominated by evangelical extremists and military dictatorship apologists, and is authoring or advocating on behalf of a slate of proposed laws that would not only dismantle Marco Civil’s provisions for consumer privacy and freedom of expression, but would also effectively criminalize the use of social media.

PL 215/15, which opponents are nicknaming the Big Spy (“O Espião”), is a surveillance law that would require Brazilians to enter their tax ID, home address and phone number to access any website or app on the internet, and require companies like Facebook and Google to store that information for up to three years and provide access to police with a court order. An earlier draft said “competent authorities” could request the data without a court order.

Another part of the law, authored by Cunha, would allow politicians to censor social media practically at will.

So, uh, yeah. It's not looking good for the internet right now in Brazil, despite looking so promising just a year ago.

Filed Under: access, apps, bans, brazil, free speech, marco civil
Companies: facebook, whatsapp

Did Marco Rubio's Campaign Violate The CFAA? Will He Commit To Reforming It?

from the broken-law dept

We've talked a lot in the past few years about the desperate need to reform the CFAA -- an absolutely horrible "anti-hacking" law that has been stretched and broadened and twisted by people over the years, such that it's frequently used to "pile on" charges when nothing else will stick. If you want to go into a lot more detail, you can listen to the podcast we recently did about the CFAA, or listen to this wonderful podcast that Reply All did about the CFAA (where I also make a brief appearance). But one of the biggest problems with it is that it considers you to be a dangerous hacker if you access a computer/network "without authorization" or if you merely have "exceeded authorized access." It's that latter phrase that often causes trouble. What does it even mean? Historically, cases have been brought against employees who use their employer's computers for non-work related things, against someone for supposedly failing to abide by MySpace's terms of service and for downloading too many academic journals that were freely available for downloading on MIT's campus network.

Keep that in mind as you read this Associated Press story about how Presidential candidate and current Florida Senator Marco Rubio's "low-budget" Presidential campaign office got free internet access for a bit:

At one of the campaign's Nevada offices, staffers tried to do their part to live up to the less is more mantra. After noticing a pizza place next to a campaign office had free wireless internet that required a password, a staffer walked over and bought two pieces of pizza and asked for the internet access code.

But the cost-cutting measure was short-lived. After about three weeks, the pizza place caught on and asked the Rubio team to stop.

It's not at all difficult to see how that could be "exceeding authorized access" under the statute. After all, it's pretty clear that the intent of the access is for customers while they're in the restaurant. That seems to be confirmed by the fact that the pizza place asked the Rubio campaign to knock it off once it discovered what was going on. Now, for it to be a felony, there needs to be $5,000 worth of damage -- but considering that in another recent case, the DOJ turned a single news article defacement (that lasted just 40 minutes) into a supposed $929,977 in damages, I'm sure some creative math can make the use of the WiFi into something greater than $5,000. You just need to argue that the congestion on the WiFi likely turned off customers who may not ever come back, and the value of those losses exceeds $5,000.

Now, Rubio hasn't really been involved at all in the debate over the CFAA and reforming it. The only official "policy" line he has even closely related to it on his campaign issues page suggests he'd favor making the CFAA punishments even worse: "Use American power to respond harshly to international cyber attacks on American citizens, businesses, and governments." Of course, that's focused on foreign attacks, so may not apply directly.

Either way, this seems like something an enterprising political reporter might want to ask the Rubio campaign, seeing as they themselves may have potentially committed a felony under the current CFAA.

Filed Under: access, cfaa, cfaa reform, internet access, marco rubio