As Recording Industry Announces Massive Growth, Why Do We Need Article 13 Again?

from the questions-to-ponder dept

A key claim by those who support Article 13 is that it's necessary to get "fair compensation" for artists on the internet. Whenever more specifics are needed, supporters almost always point to musicians, and talk about "the value gap" and how internet companies are taking all the money and recorded music has been destroyed by the internet and all of that. And, of course, if you've followed the rhetoric in the last 20 years since the introduction of Napster, you'd believe that the recorded music business is in a never-ending death spiral. Of course, as we've pointed out, the "recorded music business" is just one segment of the larger music business, and nearly all other aspects of it (especially live music) have continued to grow pretty consistently each year.

But, a funny thing has happened in the past few years that undermines the doom and gloom message: the recorded music business has been growing. Rapidly. And it's entirely due to the internet and all of the various services that the RIAA had been slamming for years. Indeed, it did seem notable when the RIAA put out its latest revenue numbers for 2018, showing the incredibly rabid growth over the past four years of the recorded music business. So I started taking an even closer look at what's happened over the past decade. Thankfully, the RIAA actually makes all of the data available, and so I put together this handy chart:

So, yes, things sort of bumbled along for the first few years of the past decade, but the last few years are ones of massive and incredibly rapid growth due to online streaming. The US recorded music business is right at about $10 billion (if you're interested, the live music business in the US is about the same, counting both ticket sales and sponsorship).

Now, you might say, well that's just the US, and Article 13 is about Europe. Thankfully, IFPI puts out similar numbers (counted slightly differently, unfortunately, so it's not an exact comparison). IFPI has not yet released its 2018 numbers, but looking at the report from last year you see that the global numbers show a pretty similar change, again, with things bottoming out a few years back, and then showing new growth, almost entirely from the rapid increase in streaming services. I expect when IFPI releases its 2018 numbers, we'll see just as dramatic a bump up as we see with the RIAA's US numbers:

So, it certainly looks like the internet (as some of us predicted...) has absolutely been the savior to the music business -- it just took the legacy companies hellishly long to embrace it.

But, again, I'm left wondering why is it that we need Article 13 again? To hear Axel Voss and other supporters talk about it, the recording industry is in a death spiral without it. Yet, the actual stats show things are going quite well and growing like gangbusters.

Filed Under: article 13, copyright, culture, eu, eu copyright directive, growth, recording industry, streaming
Companies: ifpi, riaa

AT&T Begins Trying To Screw Up HBO In Earnest

from the ill-communication dept

If you haven't noticed by now, big telecom companies aren't particularly good at wandering outside of their core competencies. They've been government-pampered monopolies so long, innovation, creativity, and competition are concepts that are utterly foreign to their underlying genetics.

Nowhere has that been more apparent than big telecom's attempt to pivot to streaming and online advertising. Verizon's first foray into media, you'll recall, was a short-lived "tech news" website called Sugarstring, which was quickly shuttered after the telco banned its reporters from discussing subjects like net neutrality or government surveillance. That was followed by a botched joint venture with RedBox. And Verizon's failed Go90 and Oath efforts, which involved mashing together two failed nineties brands (AOL & Yahoo), then pretending that would be enough to do serious battle in the space.

AT&T is now following closely in Verizon's footsteps in the wake of its $86 billion merger with Time Warner (and HBO). The company this week made more than a few headlines when news broke that longtime HBO CEO Richard Plepler, responsible for the lion's share of HBO's success over the last 29 years, would be stepping down. The reason? While most news outlets beat around the bush, it's because he had a hard time getting along with hard-headed AT&T executives:

According to people familiar with the matter, this is an issue of autonomy. Plepler wanted to run HBO, and new WarnerMedia CEO John Stankey, an AT&T veteran, was effectively running HBO. Plepler had ideas about technology and international expansion that didn't jibe with Stankey's vision, according to a person familiar with the matter. The two are also "different people" and didn't have the closest relationship, another person said. So after six years of running HBO autonomously, Plepler told Stankey earlier this month he wanted to leave, two of the people said.

If you've been watching this saga unfold, that shouldn't be surprising. Hints of trouble in the new union emerged last summer during an all hands on deck meeting, where AT&T executives effectively told HBO executives they should stop focusing on this whole quality thing, and begin thinking about quantity and user data monetization:

(AT&T's John) Stankey described a future in which HBO would substantially increase its subscriber base and the number of hours that viewers spend watching its shows. To pull it off, the network will have to come up with more content, transforming itself from a boutique operation, with a focus on its signature Sunday night lineup, into something bigger and broader.

“I want more hours of engagement. Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow’s world.”

Except creatives do their best work with a healthy degree of autonomy from left-brained bean counters. They don't want the god-damned phone company, for which creativity and innovation is an foreign construct, meddling too heavily in their production decisions. And not too surprisingly, a number of HBO and Time Warner employees have groused to Recode's Peter Kafka that AT&T doesn't really have any idea what they're doing (a point kind of downplayed in his piece):

More recently, when I called an HBO source to get their perspective on AT&T’s plans for WarnerMedia, that person described the plans as “inchoate,” an adjective that has rattled in my head ever since. If they’re willing to say that to a reporter, imagine how they really feel.

I've studied AT&T for twenty years of my adult life. This is a company whose leadership is really very good at a long list of things. They're good at running networks (usually), lobbying the government to hamstring competition, and finding creative ways to rip off its own customers, taxpayers, and even the disabled. What they're not so good at is creativity, innovation, and actual competition, since their near-total domination over state and federal regulators--and the lack of competition in their broadband businesses--means those particular attributes have rarely been exercised.

Like Verizon, AT&T has spent the better part of the last two decades getting millions in taxpayer subsidies for fiber networks that were never fully deployed. Also like Verizon, AT&T executives have a bone-grafted jealousy of Silicon Valley's domination of online advertising and video. But both companies have no earthly idea how to get there without cheating. As a result, their efforts quite often wind up looking like a doddering grandpa who is simply trying too hard to fit in:

AT&T first thought it would be a good idea to pay $67 billion for satellite TV provider DirecTV on the eve of the cord-cutting revolution, seemingly oblivious to the fact that satellite TV was just about to become irrelevant. That fact was quickly made obvious by the massive video subscriber losses AT&T and DirecTV have witnessed as users quickly cut the cord for streaming alternatives. While the deal's initial subscriber growth provided some benefit in terms of greater leverage in programming negotiations, they've been bleeding subscribers ever since. It was the first big hint that AT&T didn't actually know what it was doing.

AT&T then spent another $86 billion to acquire Time Warner, hoping that control over this must-have content would somehow magically cement its supremacy in video in concert with the DirecTV deal. But the mammoth debt from both mergers quickly drove AT&T toward nickel-and-diming both customers and competitors alike in a bid to get its financial head above water. This resulted in competitors like Dish dropping HBO from their lineups entirely due to cost, and even its newfound streaming customers have been fleeing for the exits in record numbers due to price hikes.

A lot of AT&T's thinking is typical of big telecom, where growth for growth's sake is encouraged and executives think you can merge your way to success. And while that might work in the competitively-addled broadband sector, the tight-margin, ultra-competitive streaming space is an entirely different animal. AT&T allegedly now wants to fuse HBO with Turner Media with an eye on churning out shorter-form, quickly-monetizable schlock at scale. It's the precise opposite of why HBO, one of several companies they just spent billions on, has long been so successful.

AT&T is a company for which ethics, quality, and creativity are alien phrenology, and if you've spent more than five minutes watching AT&T do business, it's apparent in everything it touches. Plepler smelled the odor on the wind and got out while the getting was good. Other talent is going to follow, and the brain and talent drain is going to create entirely new issues. While it's likely HBO will continue trucking along semi-functionally for a few years on the backs of projects already in the pipeline, it's hard to think AT&T's influence won't have a decidedly negative impact on the pioneering channel over the long term.

Even AT&T's knack for cheating and lobbying aren't likely to save AT&T from its own bad impulses, or secure supremacy in the face of something entirely foreign to the Dallas-based telecom giant: actual, meaningful competition.

Filed Under: content, john stankey, over the top, richard plepler, streaming, telcos
Companies: at&t, hbo, time warner

Steven Spielberg Demands Netflix Get Off His Damn Lawn

from the swimming-upstream dept

We've noted for years that there's a certain segment of the media and entertainment industry that despises Netflix. Some of this is based on a disdain for Netflix coming to town and throwing oodles of cash around, but a larger chunk is driven by those who simply don't like change but can't admit as much. A good example of that later motivator has been the Cannes film festival, which recently banned Netflix from participating in the awards.

When asked to explain why, festival head Thierry Fremaux couldn't really provide a solid answer, but did infer that what Netflix does can't be considered good because it doesn't adhere to traditional and often counterproductive business tactics (like antiquated release windows):

"The Netflix people loved the red carpet and would like to be present with other films. But they understand that the intransigence of their own model is now the opposite of ours,” Thierry Fremaux said."

This idea that Netflix is "demolishing tradition" runs deep in many entertainment industry circles. There's this pervasive belief that if you (gasp) allow longstanding entertainment and film industry models to change, you'll kill tradition and the inherent nobility of traditional film. Again, you usually won't see a whole lot in terms of hard data in these arguments; just these vague, nebulous charges that Netflix and other streaming services -- despite increasingly winning their own awards for programming -- are somehow disrupting the sanctity of traditional business models.

This disorder flared up again last week when reports emerged that Steven Spielberg planned to pressure the Academy to ban streaming services like Netflix from receiving any future awards:

"Spielberg, a current governor of the Academy’s directors branch, plans to propose changes to Oscars eligibility rules, arguing films that debut on streaming services or get a short theatrical run should qualify for the Emmys instead of the Oscars, according to IndieWire.

“Steven feels strongly about the difference between the streaming and theatrical situation,” an Amblin spokesperson told IndieWire. “He’ll be happy if the others will join [his campaign] when that comes up [at the Academy Board of Governors meeting]. He will see what happens."

Again, you'll notice in the stories covering this subject that little to no actual effort is made to explain why this should happen, just a vague, meandering argument that these services somehow upset the sanctity of the traditional film industry and the brick and mortar "theater experience." Often you'll see claims that streaming services are killing traditional theaters, but data usually doesn't support that claim. A recent study found that young viewers who stream a lot of content at home are more likely to go see films at the traditional, brick and mortar theaters Spielberg claims Netflix is somehow destroying.

Meanwhile, many of the things Netflix has disrupted needed disrupting, like dated release windows that no longer serve a functional purpose, and the elimination of geographical viewing restrictions that wind up annoying paying customers. Among Spielberg's concerns is, apparently, the idea that Netflix just produces "TV movies" that shouldn't be considered high-brow enough to win an Oscar:

"Once you commit to a television format, you’re a TV movie,” he continued. “The good show deserves an Emmy, but not an Oscar."

But Roma's performance at the Oscars rather quickly obliterated that argument, as have a number of high-profile Netflix successes over the last few years. What Spielberg's really engaged in is just vanilla protectionism driven by a fear of change.

Many were, understandably, quick to urge the Academy to open its mind to diverse opinions on this subject:

Netflix also offered a fairly pointed response to Spielberg's attempt to blackball the company from awards consideration:

Does Netflix produce a lot of crap? Yes. Does the company use cash to throw its weight around? Sure. So do traditional Hollywood studios (don't tell anybody). But the laundry-list of awards that Netflix has already won make it clear Netflix isn't just some parasite. It's just a disruptive presence to yet another legacy industry that's nervous about change. If Netflix is legitimately doing stupid things then focus on those. But this idea that it shouldn't qualify for awards because it doesn't adhere to dated technological norms is just more grumbly ranting from grandpa's front porch.

Filed Under: awards, hollywood, internet, oscars, steven spielberg, streaming
Companies: netflix

Once Again, Sharing Streaming Passwords Is Not 'Piracy' Or 'Freeloading'

from the we've-been-over-this-already dept

We'll apparently have to keep making this point until it sinks in.

For years now, streaming video providers like HBO and Netflix have taken a relatively-lax approach to password sharing. Netflix CEO Reed Hastings has gone so far as to say he "loves" password sharing, and sees it as little more than free advertising. Execs at HBO have similarly viewed password sharing in such a fashion, saying it doesn't hurt their business. If anything, it results in folks signing up for their own accounts after they get hooked on your product, something you'll often see with kids who leave home, or leave college and college friends behind.

In other words, the actual streaming providers consistently say they see password sharing as a form of marketing. And most of these services have built in limits on the number of simultaneous streams per account that can operate at any one time, deflating much of the utility for heavy users looking to piggyback on others' accounts. That caps the phenomenon from operating at any scale that could prove truly harmful (say by 20 users sharing one Netflix account).

That doesn't stop folks from conflating password sharing with "piracy." You'll see older cable executives occasionally whine about this subject, not understanding how any of this works. You'll also see stories like this one pop up every so often, insisting these companies are losing "X" millions because they're not cracking down harder on password streams:

"As many as 1 in 5 people today are mooching off of someone else’s account when streaming video from Netflix, Hulu or Amazon Video, according to a new study from CordCutting.com. The report estimates Netflix could be losing $192 million in monthly revenue from piracy — more than either Amazon or Hulu, at $45 million per month and $40 million per month, respectively.

Millennials, not surprisingly, account for much of the freeloading."

Is there nothing we won't blame Millennials for? Poor souls.

Of course potential lost sales are not the same as guaranteed lost sales, as you don't know these users would necessarily sign up for service if they weren't allowed to share the account. Many might just actually pirate the content instead.

Meanwhile, calling it "freeloading" (as Techcrunch does) or "mooching" (as the study authors do) is also misleading. The account owners have signed off on the sharing, it's an idea that's built into the core business model, and the streaming operators themselves have repeatedly stated they're not only fine with it, but often see it as beneficial. Again, here's what Netflix said about the practice a few years back:

"We love people sharing Netflix," CEO Reed Hastings said Wednesday at the Consumer Electronics Show here in Las Vegas. "That's a positive thing, not a negative thing."...A lot of the time, he said, household sharing leads to new customers because kids subscribe on their own as they start to earn income."

And this is what former HBO exec Richard Plepler told BuzzFeed a few years back:

"It's not that we're unmindful of it, it just has no impact on the business," HBO CEO Richard Plepler said. It is, in many ways, a "terrific marketing vehicle for the next generation of viewers," he said, noting that it could potentially lead to more subscribers in the future.

"We're in the business of creating addicts," he said at a BuzzFeed Brews event in New York.

So if it's sanctioned and a form of free marketing, calling it "piracy" is arguably silly. Could you possibly make more money by being a hard ass about the practice? Maybe. But you'd cancel out the net benefit of ingratiating people to your brand and service. Is it possible Netflix and HBO begin cracking down on the practice now that the former is part of the MPAA and the latter is owned by legacy-minded AT&T? Probably. They likely just wanted to grow initial market share, then figured they'd clamp down on the practice later once they'd grown powerful.

But that still doesn't make password sharing "piracy" or "freeloading." And by cracking down on the practice you risk driving this accumulated base of would be customers to piracy instead, in which case you've arguably played yourself. Given that every broadcaster and its grandmother is expected to launch a streaming platform over the next few years, the market is about to be flooded with options. Being semi-casual about sharing could prove to be a competitive advantage, and being a hard ass could, again, either drive those customers you egotistically see as automatically "yours" to piracy, or to a more open-minded competitor.

Filed Under: losses, password sharing, piracy, streaming
Companies: hbo, netflix

Judge Ruling In AT&T Merger Again Highlights Broken Antitrust Enforcement, Court Myopia

from the ill-communication dept

Last year AT&T defeated the DOJ's challenge to the company's $86 billion merger with Time Warner thanks to a comically narrow reading of the markets by U.S. District Court Judge Richard Leon. At no point in his original 172-page ruling (which approved the deal without a single condition) did Leon show the faintest understanding that AT&T intends to use vertical integration synergistically with the death of net neutrality and neutered FCC oversight to dominate smaller competitors and tilt the entire internet ecosystem in its favor.

While the DOJ lost its original case, it was quick to appeal late last year, highlighting how within weeks of the deal AT&T had jacked up prices on consumers and competitors like Dish Networks, which says it was forced to pull HBO from its lineup because it could no longer afford the higher rates. Those rate hikes were directly courtesy of the huge debt AT&T incurred from both its 2015 merger with DirecTV (which eliminated a direct pay TV competitor from the market), and last year's Time Warner merger.

None of this apparently mattered to a three-judge panel from the US Court of Appeals for the DC Circuit, which ruled this morning (pdf) that AT&T's latest merger would be allowed to stand. According to the Judges, the DOJ's claims that Leon failed to understand basic economic realities in the broadband and video markets were "unpersuasive." Much like the initial Leon ruling, the cornerstone of the Judges ruling centers around the idea that because there's more and more streaming competition, any anti-competitive problems from the deal would be mystically mitigated:

"Evidence also indicated that the industry had become dynamic in recent years with the emergence, for example, of Netflix and Hulu. In this evidentiary context, the government’s objections that the district court misunderstood and misapplied economic principles and clearly erred in rejecting the quantitative model are unpersuasive. Accordingly, we affirm."

But, like the Leon ruling, the Judges failed to understand the bigger picture, almost to an embarrassing degree. In part with the DOJ's help, since throughout the entire case, the phrase net neutrality wasn't uttered even once in context.

While AT&T does face more competition via streaming competitors, its control over wireless and wired broadband networks those services run over gives AT&T a distinct advantage. So in addition to making "must have" content more expensive for competitors (something the court just ignores), AT&T can also use its broadband networks to hamstring these emerging competitors. We've already seen that demonstrated clearly as AT&T imposes arbitrary and unnecessary usage caps on overage fees on its broadband users if they use a competitor like Netflix, but not if they use AT&T's own streaming service.

It's not rocket science to see how AT&T's domination of broadband, control of essential content, and successful obliteration of FCC oversight all work synergistically to distort the market AT&T operates in. This is a company that effectively told the Ajit Pai FCC to go neuter itself, and the agency was more than happy to oblige. It's the same company that had so much political power, it was able to convince the government to retroactively change the law when it was found to be spying on Americans without a warrant. The problems with this type of power couldn't be more obvious.

Meanwhile, the case continues to show how the steady lobbying erosion of U.S. antitrust authority is having a decidedly negative impact US market health. For decades we were told that the telecom industry should be deregulated to unleash brave new synergies and amazing innovation. This wouldn't be a problem, telecom giants and their allies insisted, because antitrust authority would help keep these natural monopolies in line.

Yet here we are, with antitrust authority so comically eroded that lawyers are trapped within very narrow confines of economic theory, utterly incapable of proving even the most obvious of harms.

The broadband industry is a broken, natural monopoly plagued by federal and state regulatory capture. When you obliterate what few consumer protections exist, giants like AT&T and Comcast don't just mystically start behaving thanks to a free market, they just double down on existing, bad behavior. That's because telecom isn't a free market, it's a broken mess. And free of both competition and meaningful regulatory oversight, it only gets worse. History has made this point time and time again, and the public's utter disdain of Comcast and AT&T is example A.

In the wake of the telecom industry's successful attack on FCC authority, there are only a few things that can keep these natural monopolies in line absent meaningful competition. One, an FTC that lacks the authority, resources, or rule-making ability to actually police bad ISP behavior. Two, state regulators and AGs that ISPs and the FCC have working overtime. And antitrust enforcement that's been so neutered by lobbying that the government can't police even the most obvious instances of competitive issues caused by mindless merger mania.

Anybody, Judges included, that can't see the obvious problem here isn't paying close enough attention.

Filed Under: competition, doj, merger, streaming, telco, telecom, tv
Companies: at&t, time warner

Industry Claims That Cord Cutting Would Be A Fad Aren't Looking So Hot

from the adapt-or-perish dept

Remember when the cable industry used to pretend that cord cutting wasn't real? Or perhaps you remember that once the industry was actually willing to admit it was a real trend, they'd claim it was only something being done by losers living in their parents' basement?

Or perhaps you'll remember the cable and broadcast industry claims that cord cutting was just a temporary phenomenon that would go away once the housing markets stabilized and Millennials started procreating? Or how companies like ESPN routinely claimed that warnings about the trend were an unimportant fiction that should be ignored?

Good times.

While there are still a few sector analysts and executives here and there who'll bizarrely try to downplay one of the biggest trends in TV industry history, the numbers keep making it harder and harder to keep one's head buried a foot below ground. Last year, for example, once again saw one of the highest defection rates of traditional TV subscribers in recent memory. According to Wall Street analysts, the top pay TV providers lost 2.5 million subscribers last year alone:

Ironically the two companies that actually tried to adapt to the cord cutting trend suffered the worst losses. Both AT&T and Dish have launched DirecTV Now and Sling TV, respectively, in a bid to try and at least hoover up a few of these fleeing customers with their own streaming services. That's something to be applauded, especially since huge swaths of the sector have simply responded by doubling down on terrible ideas (from raising rates to fighting against real cable box competition). But even with adaptation, users are still fleeing to other alternatives (Amazon, Hulu, Netflix) instead.

It's not going to be getting any easier for entrenched pay TV providers, especially the ones that stubbornly refuse to compete on price. The streaming market will soon face a new rival in the form of Apple's and Disney's new Disney+ streaming service, which will be the exclusive home of most Star Wars, Marvel, Pixar, and Disney children's' programming:

"The clear implication is that year-over-year subscriber trends for programmers that improved throughout 2018 are set to worsen again in 2019,” Greenfield wrote. The analyst is widely known as bearish on the pay-TV sector, frequently using the hashtag #goodluckbundle in his commentary (as he did in Wednesday’s post). The cord-cutting problem promises to grow even more exacerbated as new subscription-streaming services from Disney (Disney+), WarnerMedia and NBCUniversal hit the market starting later this year. Those will via for consumers’ entertainment dollars against SVOD players like Netflix, Hulu, and Amazon Prime Video."

So if companies like AT&T and Dish are actually trying to adapt to reality, why are they seeing such major departures? Many of these users were on unrealistically cheap discounted promotions intended to drive adoption that ended. And some users were frustrated by the a price hike by AT&T in the wake of its latest megamerger with Time Warner. New streaming companies are also actually good at customer service, something the cable and broadband industry hasn't been able to get a handle on for the better part of a generation.

Between tight margins and an ocean of new arrivals, it's going to be pretty hard for the cable industry to make anywhere near the same profits they were used to during the heyday of cable TV. But that's generally how competition works. And you shouldn't feel too badly for the Comcasts of the world, since their solution will simply be to jack up the cost of broadband, where competition is far weaker. Still, there's a subset of executives who still seem to somehow believe they're owed a permanent position of dominance without having to work for it. That delusion is falling apart more quickly than most of them expected.

Filed Under: cable, cord cutting, over the top, streaming

Former FCC Official Attempts To Create An Aereo That The Supreme Court Won't Kill

from the quack-quack dept

If you've been following copyright issues for more than a few years, you surely remember Aereo, a company that attempted to set up a bunch of micro-TV antennas which it could then use to stream broadcast TV to paying subscribers. What was fascinating about Aereo was how it was set up in a manner that was positively insane to any technologist -- but was considered "necessary" to comply with the law, following a bunch of nonsensical copyright rulings from other companies trying to offer streaming TV. And, incredibly, its careful following of the rules was declared to be proof that it was trying to "get around" the rules.

And then, even more bizarre, the Supreme Court ruled against Aereo using no actually defined standard, but basically just saying that it looked too much like a cable service, so they'll call it a cable service (something I've referred to as the Supreme Court's "looks like a duck" doctrine). As we pointed out at the time, part of the problem with such a weird test is that it provided zero guidance to tech innovators who wanted to build a system within the law. Basically, the Supreme Court (or lower courts) can now decide that something "looks" too much like another system, and decide it's magically illegal... just because.

However, it appears that at least one operation is trying again with an Aereo-like approach. And once again, it's taken a very legally-focused approach. Perhaps that's because it's been set up by a lawyer, David Goodfriend, who formerly worked for the FCC (and in the media industry). The NY Times has a big article about his Locast operation, and how he's hoping to get sued to prove that his approach is legal, where Aereo's failed. The basic approach does sound quite like Aereo:

On the roof of a luxury building at the edge of Central Park, 585 feet above the concrete, a lawyer named David Goodfriend has attached a modest four-foot antenna that is a threat to the entire TV-industrial complex.

The device is there to soak up TV signals coursing through the air — content from NBC, ABC, Fox, PBS and CBS, including megahits like “This Is Us” and this Sunday’s broadcast of Super Bowl LIII. Once plucked from the ether, the content is piped through the internet and assembled into an app called Locast. It’s a streaming service, and it makes all of this network programming available to subscribers in ways that are more convenient than relying on a home antenna: It’s viewable on almost any device, at any time, in pristine quality that doesn’t cut in and out. It’s also completely free.

There are a couple of difference between Aereo and Locast, starting with the fact that Locast is offering its services for free. The second is that Locast is set up as a non-commercial entity, rather than a for-profit company (which also helps explain the "free" to subscribers bit). And it is true that copyright law is somewhat kinder to non-profits. But just barely. Goodfriend thinks he's on solid legal ground, though, to be fair, so did Aereo.

“We really did our homework,” he said. “We are operating under parameters that are designed to be compliant within the law.”

He also notes, correctly, that the whole point of over the air terrestrial broadcasts is that they're supposed to be available for free, to anyone with an antenna. That was kind of the whole point. On top of this, of course, courts have already said that it's perfectly legal to stream content that you capture legally via an antenna over the internet for viewing. The real difference here, as it was with Aereo, is just who technically owns the antenna.

“The American people have given you something really valuable, the airways, for free,” he said, talking about the broadcasters, his eyes popping at the word “free.” Slowing down for emphasis, he added: “So shouldn’t we get something back for free? Which is great television. That’s the social contract, right?”

The article further notes that Goodfriend -- who initially designed the idea of Locast while teaching the Aereo case to law students at Georgetown -- would "welcome a legal challenge" from the TV networks to prove that his approach is legal -- though it's unclear if the networks feel like going after him. The article quotes Aereo founder/CEO Chet Kanojia, who points out that the networks ignored Aereo until it raised a bunch of money from Barry Diller, and then suddenly it became worth it to sue. Goodfriend notes that he's currently chasing down funding deals, even approaching his own version of Barry Diller in Dish Network's Charlie Ergen (for whom Goodfriend used to work), but so far has not closed anything.

Assuming Locast actually does start to catch on (and a big story in the NY Times certainly will give it a pretty big bump), I would be surprised if the networks didn't eventually sue, and then we get to go through the Aereo debate all over again. Quack, quack, quack.

Filed Under: antennas, broadcast tv, copyright, david goodfriend, over the air, quacks like a duck, streaming, tv
Companies: aereo, locast

Canada's Bell Tried To Have VPNs Banned During NAFTA Negotiations

from the missing-the-point dept

Countries around the world continue to wage a not particularly subtle war on the use of virtual private networks (VPNs) and encryption. In Russia, the government has all but banned the use of VPNs by layering all manner of obnoxious restrictions and caveats on VPN operators. The goal, as we've seen in China and countless other countries, is to ban VPN use without making it explicitly clear you're banning VPN use. The deeper goal is always the same: less privacy and online freedom for users who use such tools to dodge surveillance or other, even dumber government policies.

Of course there's plenty of companies eager to see VPN use banned as well, whether it's the entertainment industry hoping to thwart piracy, or broadcasters trying to hinder those looking to dance around geographical viewing restrictions. Lost in the hysteria is usually the fact that VPNs are just another security tool with a myriad of purposes, most of which aren't remotely nefarious and shouldn't be treated as such.

Apparently, you can count Canadian telecom incumbent Bell among the companies hoping to ban VPN use. Anja Karadeglija, the editor of paywalled telecom news outlet the Wire Report, obtained documents this week highlighting how Bell had been pushing Canadian Foreign Affairs Minister Chrystia Freeland for a VPN ban to be included in NAFTA negotiations. Why? It doesn't want users using VPNs to watch the US Netflix catalog:

"In its submission, Bell argued that Canadians accessing content from a US service with a VPN “unjustly enriches the US service, which has not paid for the Canadian rights” but nonetheless makes that content available to Canadians. Bell’s media arm reportedly spends millions on content for it streaming service, Crave TV, which allows Canadians to stream content from American networks such as HBO and Showtime."

Again though, it's not the VPN doing that. And if you want to stop users from flocking to better content catalogs elsewhere on the continent, you should focus your ire on the things causing that to happen -- like increasingly dated and absurd geo-viewing restrictions, and your own substandard content offerings that fail to adequately match up. That message was lost on Bell, however:

“Canada should seek rules in NAFTA that require each party to explicitly make it unlawful to offer a VPN service used for the purpose of circumventing copyright, to allow rightsholders to enforce this rule, and to confirm that it is a violation of copyright if a service effectively makes content widely available in territories in which it does not own the copyright due to an ineffective or insufficiently robust geo-targeting system,” the submission stated."

How exactly you're supposed to determine that somebody is using a VPN to not watch Bell's own television services isn't really explained, and the fact that enforcement would likely be technically impossible appears to have been an afterthought. As Canadian Law Professor Michael Geist was quick to note, trying to ban VPNs just as they're reaching critical mass as a partial solution to raging North American privacy scandals suggests Bell may not exactly have its finger on the pulse of common sense on this particular subject.

Filed Under: canada, streaming, trade agreements, usmca, vpn, vpns
Companies: bell canada

Disney Goes All Disney On The Kingdom Hearts 3 Title Screen Over Streaming

from the house-of-mouse dept

When it comes to the idea of members of the public live-streaming video game gameplay, the world is an unpredictable place. Some developers and publishers are happy to allow such a display of their products, understanding a concept that is apparently difficult for others to grasp: playing a game is a very different thing than watching someone else play it. Those that are less permissive in streaming gameplay are typically the larger corporate interests that tend to believe in control above all else, with the attitude being that unveiling gameplay will make it less likely for viewers to buy a game, rather than more likely. In between is a truly broad spectrum, where some publishers lay out rules on websites and others say little to nothing on the topic that isn't vomited up by their legal teams.

Leave it to Disney, then, to put its stamp on the latest iteration of the Kingdom Hearts series, with a message to anyone that would consider streaming the game right there on the title screen.

People who start playing Kingdom Hearts 3 will find a message notifying them that the companies behind the game are applying some limitations. The game’s title screen includes an unusual button prompt labeled “before you stream.” Pressing the button produces the following message:

This game is a copyrighted work. The copyright is held by The Walt Disney Company and a collaboration of authors representing The Walt Disney Company. Additionally, the copyright of certain characters is held by Square Enix Co, Ltd.

You are free to stream the game in non-commercial contexts. However, using the streams of the game to primarily provide or listen to the music is prohibited even in such non-commercial contexts.

While this is a somewhat permissive stance on streaming, essentially allowing for some streaming under certain conditions, it's still a very Disney way to go about it. First is the company's acknowledgement that streaming is so very much a thing at this point so as to warrant the inclusion of a message on game's title screen. That may seem like a small thing, but it's actually a fairly stark admission on the part of Disney as to what the ecosystem for streaming games is today. And, then, comes the muddled parameters under which streaming is kosher, with restrictions on "commercial contexts", without bothering to provide any context for that phrase itself. And, of course, there is the requirement that game streams aren't done as a method for simply broadcasting the game's original score, which is downright perplexing. I'm not aware of that sort of practice even being a thing and I'm fairly steeped in this world of game streaming.

And I'm not the only one scratching his head at all of this.

The streaming message isn’t exactly crystal clear. One part of it is easily understood: Square and Disney don’t want people making streams of the game’s music. But the statement is more confusing about what the rights-holders consider to be a “non-commercial” stream. The message concludes by directing players to Kingdom Hearts website, which doesn’t yet include any information about this, though it presumably will by the time the game launches in the West on Tuesday (it came out in Japan on Friday).

We asked Square Enix PR yesterday what “non-commercial” streaming would be and if it’s something that average gamers who just want to stream on Twitch or YouTube would have to worry about. They were unable to clarify that terminology yet.

And, so, Disney attempts on the title screen to take the mystery out of what it will allow in streaming the game, but apparently there is still a conversation the company needs to have within itself, as the PR folks can't articulate what it all means themselves. The end result is Disney attempting to assert control over the sharing of parts of its product in the least clear manner possible. It's a very Disney thing to do, in other words.

Meanwhile, it doesn't appear to be keeping the now-normal practice of game streaming from happening overseas.

Whatever the restrictions actually mean, they don’t appear to be stopping people from streaming the game. People have been streaming Kingdom Hearts 3 on Twitch since yesterday, when the game went on sale in Japan and when the the streaming embargo lifted for reviewers and gaming influencers who’d been provided advance access to the English language version of the game. At the time of this writing, there are more than a thousand people watching 88 streams of the game on Twitch.

So, for now, this appears to be a title screen message without much of an audience.

Filed Under: games, streaming, the kingdom hearts 3, title screen, video games
Companies: disney, square enix

Max Schrems Files New Privacy Complaints That Seem To Show The Impossibility Of Complying With The GDPR

from the what-a-stupid-law dept

We've written many times about privacy activist Max Schrems, who almost single-handedly brought down the silly privacy safe harbors between the EU and the US. Last year, we wrote about his newest project called noyb.eu, which stands for "None Of Your Business."

Last week, Schrems and noyb announced a big list of GDPR complaints filed in Austria, against basically every streaming media company, none of which -- they claim -- are in compliance with the GDPR. Schrems also provided everyone with a handy dandy chart showing the basic details of the results of the GDPR requests they made to eight different streaming platforms, where they fell down, and how much they might be on the hook for:

If you'd like to see the actual complaints, here they are for Amazon, Apple, DAZN, Flimmit, Netflix, Soundcloud, Spotify, and YouTube.

I have lots of thoughts about this, so let's list them out:

1. This demonstrates the near impossibility of complying with the GDPR: While I'm sure many will view this as a positive for the GDPR, in that Schrems is going after a bunch of big companies who many people love to hate, I'd argue that these complaints really show just how ridiculous the GDPR is in practice. At least with the larger companies on this list (Amazon, Apple, YouTube, Netflix, and Spotify) it is ridiculous to argue that any of them were deliberately avoiding the GDPR requirements. All of those companies have been well aware of the GDPR for years and spent the past few years spending many, many millions of dollars preparing for the GDPR. All have decently large teams focused on doing everything they can to comply, in part because of the possibility of massive fines if they fail.

   The fact that those large companies, who have all the resources in the world, are still deemed by Schrems to fail on nearly every aspect of the GDPR suggests, pretty clearly, that it is nearly impossible for anyone to truly be GDPR compliant in any reasonable sense.

2. The nature of the complaints shows just how silly the GDPR continues to be: Taking the Apple Music complaint as an example, the company did allow noyb and its client to download all the data it had, but noyb is demanding significantly more information under the GDPR -- much of it is information that would effectively be impossible to provide in the first place. For example, the complaint notes that Apple didn't provide "information about the purposes of the processing." But... isn't that the kind of information that anyone signing up for Apple Music already knows about when they sign up? Apple is using your information to provide you access to music and to recommend other music to you. What good does it do to have that information need to be spelled out once again at a later date to avoid massive billion dollar fines?

3. The possible fines remain completely insane: Note the numbers on the "maximum penalty" associated with these complaints. Under the GDPR, a company can be fined either €20 million or 4% of annual global turnover whichever is greater. So those eye-popping numbers are basically that 4%. Remember, most of the companies here bent over backwards to try to comply, with most of them setting up useful systems that allow users to download all of their data, even if noyb didn't like the format that data was in. And yet they might still face billions in fines?

4. GDPR could destroy some of these companies: It is surprising to see two companies -- DAZN and Soundcloud -- not respond at all to these requests. Both of them are based in the EU (though DAZN may escape via Brexit shortly, but it operates in many EU countries). I would think, at the very least, these companies would have in place some method of responding to GDPR requests. Soundcloud, despite its level of popularity, has struggled even to stay alive -- and came very close to shutting down a year and a half ago before getting a last minute reprieve from some investors. Either way, the company is clearly struggling, and the fact that both of these company's "maximum" possible fines are €20 million suggests that this is "greater" than 4% of their annual turnover. In short, this is likely a crippling and possibly company-destroying amount for these smaller operations. I'm still surprised neither responded to the requests at all -- but it's going to be difficult for either to stay in business facing these kinds of headwinds thanks to the EU's overaggressive regulations.

I'm sure that many don't seem to care that this might cause problems for these companies, or that it may be literally impossible to comply with these regulations. But we should all be concerned if regulations make it effectively impossible to be in business on the internet in the EU. We should be even more concerned that -- as many of us predicted -- regulations like the GDPR seem to have a high likelihood of completely destroying smaller players, like SoundCloud. The huge fines for the big companies are eye-popping and totally disconnected from any actual "harms," but most of those big companies can grudgingly afford to pay them. That seems unlikely for the smaller players meaning that -- once again -- the EU seems to be clearing the field of smaller internet companies, and leaving in place only the giants, from whom the government will just keep siphoning off cash.

One final point on all of this: I recognize that there are lots of legitimate concerns about privacy in this day and age -- and, in particular, how various data collection companies are using our private data. And I've long been on record that companies should be not just a lot more transparent about the data they collect and how they use it, but also should push control over that data out to the end users. But, looking over this list, none of these are companies that I'm particularly worried about concerning how they use my data. Yes, there are potential privacy concerns here, but the idea that SoundCloud or Spotify contains data so sensitive that they should be fined massive amounts for not making it "intelligible" just seems disconnected from any real harms and any real concerns.

Indeed, my concern with this type of litigation is that it actually waters down and distorts the real concerns we should be having over privacy in the internet era. Netflix not giving me all of the data on what I've been watching via streaming doesn't seem like a particularly big consumer concern -- and yet if it sucks all the air out of the room, it makes it that much harder to deal with real privacy questions raised by internet giants.

Filed Under: data protection, eu, gdpr, max schrems, privacy, streaming
Companies: amazon, apple, dazn, flimmit, netflix, noyb, soundcloud, spotify, youtube