TV Broadcasters Suing Songwriters' Org SESAC Over Pricing Power

from the tug-o'-war dept

Missed this one when it first came out, but Copycense points us to the news that TV broadcasters have sued SESAC, one of the collections agencies for songwriters and composers (the smallest, after ASCAP and BMI), claiming that SESAC is violating antitrust laws in how it prices music used in television shows -- especially for syndicated shows. The details are really quite fascinating. Local stations quite often run syndicated shows (such as sitcom reruns). When they buy the rights to run those syndicated shows, the package includes all of the related copyrights except for performance rights for any of the music included. Those have to be purchased separately by the broadcasters themselves. Now, for SESAC, representing the songwriters, this presents a golden opportunity. It's the only thing standing between the broadcaster and being able to show the syndicated shows -- and thus, it can ask for extremely high prices, or -- more commonly -- pressure the broadcasters into a high-priced "blanket license." Since the broadcasters can't change out the music (it's in the shows already), they generally have no choice but to go along. So, the argument goes, SESAC effectively has a monopoly position, and is abusing it.

Of course, the real "monopoly" here is copyright. At a quick glance, it certainly looks like SESAC is doing exactly what copyright allows -- but the structure of licensing for syndicated TV content allows SESAC to make life difficult for the broadcasters. So, I'm not really sure SESAC should really be faulted here, as it seems to be doing exactly what it was enabled to do thanks to overly broad copyright laws. At the same time, it also makes you wonder why the broadcasters don't go back to the TV program owners themselves and demand that they bundle the music performance rights as well, since there's more negotiating power there. So, while it does seem unfair for the broadcasters as the market is currently structured, I'm not sure it's an antitrust violation on SESAC's part. More a problem with how the industry licenses are set up, combined with copyright being way too broad in such situations.

There's also a separate interesting element to this lawsuit -- which is why it's SESAC being sued rather than ASCAP and BMI. ASCAP and BMI are both already limited due to previous antitrust fights and consent decrees against them, whereas SESAC has been more or less free to act this way. Either way, it's yet another lawsuit concerning aggressive use of copyright to try to demand as much money as possible, even for music that is a small part of an overall presentation of content.

Filed Under: antitrust, copyright, licensing, music, pricing power, syndication
Companies: ascap, bmi, sesac

Why Is NY, Not The FTC Or DOJ, Filing Antitrust Claims Against Intel?

from the grandstanding dept

I have no idea if Intel is really guilty of antitrust violations or not at this point -- though, considering the fact that its products keep getting faster and cheaper, it's not as if there's been some obvious huge monopoly rents handed out somewhere. However, I do find it quite odd that it's Andrew Cuomo, NY's Attorney General, filing antitrust charges against the company, rather than the federal government. The DOJ and the FTC have been investigating Intel for a while, and haven't yet filed charges. Europe has -- but Europe seems to do that against any successful American tech company eventually, as the European standard for "antitrust" often appears to be "big successful American company" rather than any proof of antitrust behavior. To have Cuomo file such a case just seems misplaced. What does it have to do with New York? Given Andrew Cuomo's rather long history of silly grandstanding to bully companies for the sake of getting his own name in the headlines, rather than any actual legal basis, it feels like more of the same. Pick a big target, don't worry about the legal specifics, but get headlines to build up the name of Andrew Cuomo. It's pretty sad that Cuomo seems to keep attacking innovative tech companies solely for the sake of building up his own political reputation. Tangling up innovation in pointless lawsuits doesn't help the economy in the slightest.

Filed Under: andrew cuomo, antitrust
Companies: intel

Looking At The Redbox Antitrust Fight

from the is-it-an-antitrust-issue-or-not? dept

Law.com has a nice article detailing the legal issues involved in the battles between Redbox and the various movie studios. The main question is whether or not it's an antitrust violation on the part of the studios to block distributors, wholesalers and retailers from selling DVDs to Redbox. The studios want (a) a revenue share from Redbox (b) Redbox not to offer new release DVD movies for rental and (c) Redbox not to sell used DVDs. The reasons are pretty obvious: Redbox is a much more competitive offering. Since it's a lot less labor intensive, it's able to offer the DVDs for much less (both rental and sale), and the movie studios are freaking out, because in their minds, their old revenue streams should never be allowed to decrease.

The statements from the studios on the dispute is incredibly disingenuous:

"The real complaint is Fox won't sell DVDs to Redbox on the terms Redbox demands, and that is not in our view an antitrust violation," said Watson, an antitrust expert who has teamed with Yosef Riemer, a litigation partner in Kirkland & Ellis' New York office, in representing Fox, part of News Corp.'s Fox Filmed Entertainment. "There's nothing in the law, antitrust or otherwise, that says a seller must sell its product at the price that the buyer demands on the date the buyer demands and through the distribution channel that the buyer demands."

Indeed, Watson is correct that no seller needs to offer the product at the price the buyer demands, but that's not what's being disputed here at all. Clearly, prior to Fox and some of the other studios throwing their hissy fit, the distributors had no problem selling DVDs to Redbox at the prices Redbox thought were reasonable. The studios sold the movies to the distributors at the usual price, and the distributors sold them to Redbox at the usual price. Everyone should be happy.

But... what happened now is that these studios (Fox, Universal and Warner Bros.) told not just the distributors (Ingram and Video Product Distribution) but also retailers like Best Buy and Wal-Mart to not sell to Redbox. That's restraint of trade. The studios have every right not to sell videos to whomever they want -- but those distributors and retailers can then sell to whomever they want. The studios should have no say in the downstream sales of the videos once they've been sold to the distributor, wholesaler or retailer. That's where the antitrust issue is. The studios are successfully controlling downstream sales.

The studios are either being disingenuous or are just playing dumb when they claim that there's no antitrust violation because end users can still rent movies from Blockbuster or Netflix. But, that's defining the wrong "user" for the market in question. The market is in being able to buy from the distributor/wholesaler, and the "customer" is a retailer like Redbox. And these studios have stopped that customer from being able to make a perfectly legitimate purchase. That's the antitrust issue, and it's amazing that the studios think anyone will believe their false market definition or this bizarre claim that this about Redbox demanding some special price. It's not. Hopefully the judge recognizes that and doesn't fall for the studios simply making stuff up.

Filed Under: antitrust, dvds, rental
Companies: 20th century fox, ingram, redbox, universal, video product distribution, warner bros.

Complaints Against Google Book Scanning Project Reach Ridiculous Levels

from the did-you-really-just-say-that? dept

There's a tremendous amount of opposition to Google's "settlement" with authors and publishers over its book scanning project. I'm on the record as being very much against the settlement, but for very different reasons than most people. Frankly, I think Google's book scanning project is an incredibly useful and culturally valuable project, that will help expand culture and knowledge sharing. It's a way to not just preserve culture, but to share it. I can't see how that's a bad thing. In effect it's really no different than Google's search engine in how it works. It's basically building a giant index so that people can search on it, and be pointed to the results that they want. Think of it as the most effective and useful card catalog you could ever have. Did people think the library card catalog violated book copyrights? Of course not...

So my main complaint with the "settlement" is why it's needed at all. Google had a strong fair use case in how it was running the book scanning project, and I saw no reason to cave. In caving, it's only set up plenty of other copyright battles -- with music companies, the press, video companies and more -- all demanding their share of Google's profits, for no reason other than that Google has scanned their works and points more people to it. There are, certainly, other objectionable parts to the settlement, but my main objection is the idea that it's even needed at all.

However, many others are objecting to the settlement for a series of increasingly ridiculous reasons, that make little sense. Gary Reback, the famed anti-trust lawyer who helped bring the antitrust lawsuit against Microsoft a decade ago, is working with the Open Book Alliance -- a group that most certainly has admirable goals in terms of its own book scanning project, but which is clearly complaining about the "settlement" because it will give Google a leg up over its own efforts. Reback's filing over the matter makes the claim that that the agreement represents an antitrust issue:

"Google could never have achieved through free-market competition the dominant position in digital books it seeks through the proposed settlement," reads Reback's filing. "Unwilling to compete for share in the open market, Google chose instead to use court process to achieve dominance."

Really? As Danny Sullivan points out, despite Reback's claims, Google's dominant position in the digital book market was achieved via free market competition. To claim that it couldn't have been is simply wrong. It's then flat out misleading to suggest that Google "chose to use court process to achieve dominance" because it wasn't Google that used the process. Remember, it was the Authors Guild and various publishers who sued Google.

Next up, we have the Europeans, who are complaining about the Google book settlement as well. This is hardly a surprise. After all, it's been nearly five years since officials in France declared Google's book scanning project a threat to national French culture, and then got together with other European governments to dump billions of dollars into a ill-defined "competitor" that has produced little of consequence (and, indeed, seemed to have no direction). The competitor has been so useless that the French National Library -- whose boss first raised the alarm about the book scanning project five years ago -- has thrown in the towel and signed a deal with Google to allow the company to scan its books.

So, what's their complaint? Well, it's the same old complaint, that Google's book scanning project is somehow a threat to their culture:

European officials fear that if the Google project goes ahead in the US, a yawning transatlantic gap will open up in education and research.

James Boyle unleashes his wit in response:

"Oh my God! The Americans are about to create a private workaround of the enormous mess that we regulators have made of national copyright policy! They will fix the unholy legal screwups that leave most of 20th century culture books unavailable, yet still under copyright! They will gain access to their cultural heritage -- giving them a huge competitive advantage in education. This MUST BE STOPPED!! No one can be allowed to fix this for any other country because then we would be left alone stewing in our own intellectual property stupidity! We must forbid their progress in order to protect our ignorance."

Again, the settlement deal has tons of problems, and I still can't see how it's necessary or how it helps -- but many of the complaints about it are simply ridiculous.

Filed Under: antitrust, book scanning, europe, gary reback
Companies: google

How Do You Claim Antitrust Against Someone Who Has A Smaller Marketshare?

from the ah,-the-internets dept

Last week, we noted that Italian investigators were looking into Google News for alleged antitrust violations in not telling newspapers how it ranks stories. As ridiculous as that assertion is in the first place, it looks even more ridiculous when you realize (as Erick Schonfeld figured out) that Google News is actually a much smaller presence online than Italy's two largest newspapers online. It makes you wonder how you claim an antitrust violation against someone, when your own marketshare is larger and you control the established brand names in the market.

Filed Under: antitrust, italy, journalism, news
Companies: google

Italian Newspapers Get Gov't To Investigate Google For Not Sharing Ranking Secret Sauce

from the seriously-delusional dept

A bunch of folks have been sending in the news that Italian regulators have begun an investigation into Google, at the request of some Italian newspapers. The complaint is a typical one from newspapers who seem slightly clueless about how Google works. They say that Google News is unfair -- even though they can opt-out, but don't. The newspapers falsely claim that if they opt-out of Google News, they also have to opt-out of Google Search. That's simply untrue. But even if it were true, I'm not sure what the point would be. Getting traffic is a good thing. It's unclear why Italian newspapers (or any newspapers) don't like it.

In fact, the whole idea that Google News is unfair for sending traffic is undermined by the other complaint from the newspapers: that Google doesn't reveal how it ranks stories:

Because Google does not disclose the criteria for ranking news articles or search results, he said, newspapers are unable to hone their content to try to earn more revenue from online advertising.

Of course, that's silly. First, plenty of people have figured out how to optimize for Google -- there's a whole industry called SEO that does that. That doesn't mean that Google needs to reveal the secret sauce. But the best response to the demand for Google to reveal how it ranks stories comes from Danny Sullivan, who turns the story around, and wonders how newspaper would feel in the other direction:

No newspaper editor of any quality would allow an external interest to walk into their newsroom and demand to know exactly how to guarantee a front page article about whatever they want. But that's what the Italian papers seem to desire. Google has an editorial process for producing rankings, one that's done using automation -- but the papers seem to want to bypass those editorial decisions.

Exactly. The newspapers are basically demanding that their stories get ranked higher, but how would newspaper editors feel about the subjects of stories in the paper demanding that their stories be on the front page. After all, being on the front page would get the subject of a story more attention, and the newspaper isn't paying those subjects -- so the newspaper is "getting all the value." -- at least according to newspaper logic.

Sullivan also does a good job highlighting how useless it would be if the newspapers did get the details on how Google ranks stuff, because then everyone would just start writing stories to get to the top of the list, and any "advantage" would be lost. Separate from that, shouldn't we be just a bit troubled to find out that the newspapers are interested in figuring out how to write stories that top Google, rather than writing stories to better inform the populace?

Filed Under: antitrust, editorial, google news, italy, journalism, news, ranking, seo
Companies: google

EU Antitrust Regulator Scolded For Simply Ignoring Evidence In Intel's Favor

from the well-that's-convenient dept

It's no secret that we think that EU antitrust regulators are way too aggressive in pursuing antitrust claims against US tech companies. The EU continues to view market size as a problem, rather than looking as closely at actual anticompetitive behavior. And, now, it's coming out that the EU's antitrust regulators may be so overzealous to take down companies that they'll ignore evidence that goes against their hypothesis. The EU's ombudsman has apparently issued a report scolding EU antitrust regulators for flat-out ignoring evidence from a Dell executive concerning Intel and AMD. The EU, as you probably know, fined Intel €1 billion a few months back, finding that the company had abused monopoly powers to force hardware makers into using its chips. But, the EU's ombud discovered that the antitrust regulators had interviewed Dell execs who said simply that AMD's chips didn't have the performance of Intel chips. In fact, in their tests, AMD's chips were "very poor," so they chose Intel chips entirely on the basis of performance. And... conveniently, the EU's antitrust regulators simply failed to record this info and did not include it in their report. Of course, you can make anyone appear to have violated antitrust rules if you purposely ignore all evidence to the contrary.

Filed Under: antitrust, eu
Companies: amd, dell, intel

Rep. Lofgren: A Real Antitrust Issue That Needs Scrutiny Is Copyright

from the about-time... dept

We talk here quite frequently about the fact that copyright (and patents) are gov't granted monopolies, and should be watched carefully because of that. Historically, economically speaking, gov't granted monopolies are bad for innovation and the economy. However, over the last few decades, there's been a big push by those who benefit from monopoly rents to try to redefine them as "intellectual property" rather than the more accurate description as a gov't granted monopoly. For the most part, our elected officials have bought into that language shift. Could that finally be changing back to a recognition that copyrights are monopolies and deserve the same scrutiny as any other economic monopoly? Today we saw a small move in that direction with a Congressional Rep admitting that copyrights are a monopoly and deserve scrutiny from the Judicial Dept. for that very reason.

I'm at the always-excellent State of the Net West event today, and the second discussion is about Antitrust in the Internet Era, and the discussion was introduced and led by Congresswoman Zoe Lofgren, who had a number of surprising (in a good way) remarks. On traditional antitrust issues, she's worried that antitrust actions aren't being used to stop anti-competitive behavior but for anti-competitive purposes. She notes that many in Congress don't really understand the purpose and reasoning behind antitrust and assume that dominance or marketshare automatically means there's an antitrust problem. And, of course, there is the problem of regulatory capture. So, she notes that you'll see elected officials basically read out talking points on antitrust issues from competitors -- rather than actually looking at whether or not there's real harm to the market. So, she suggests that the framework for antitrust issues should be looking at innovation and whether or not that's happening or is being hindered. Of course, the cynical out there (you know who you are) might suggest that these sound sorta like Google's talking points... Either way, she says she's trying to set up a seminar for the Judiciary Committee about antitrust, to get them better educated about the real issues related to antitrust, and that seems like a good thing.

However, much more interesting and unexpected were her brief comments at the end of her remarks, where she took on copyright, noting that it is a gov't granted monopoly that deserves antitrust scrutiny. She said, "Let's face it, copyright extension these days is 'limited' to the life of Mickey Mouse." And yes, there was sarcasm in her voice over the word "limited." The guy sitting next to me who works at Disney started shuffling uncomfortably.... Lofgren went on to say that copyright is being used to put up barriers to competition and innovation and is an issue that antitrust regulators really should be scrutinizing. This is really surprising, but really good to hear. Lofgren has been one of the (very) few elected officials who actually does "get" copyright issues, but this is the first time I've heard any elected official recognize that copyright is a monopoly/antitrust issue that deserves serious scrutiny for the way it's so frequently abused for anticompetitive purposes.

Filed Under: anticompetitive, antitrust, copyright, monopoly, zoe lofgren

Looking Back At The Microsoft Antitrust Suit: Did It Matter?

from the probably-not... dept

We've argued before that the antitrust lawsuit against Microsoft was misguided (though, I'll admit that I was in the camp that thought it made sense at the time, before realizing that was a mistake). The fact that the EU continues to go after Microsoft on antitrust issues seems even more silly. Farhad Manjoo has an article in Slate, officially about why it doesn't make sense to go after Google on antitrust charges, but with most of it detailing why Microsoft wasn't really an antitrust problem:

Many of Microsoft's assets turned out not to matter, because upstarts like Google and old foes like Apple found ways to innovate around them.

Indeed, in many ways Microsoft's size was a liability, not an asset. This is the classic innovator's dilemma; the company was so intent on protecting its cash cows--it derives most of its revenue from two products, Windows and Office--that it was blind to opportunities in new markets. Microsoft couldn't make a Web e-mail system like Gmail, because that would have threatened Outlook. And why should Microsoft bother with free online word processing apps when Office was doing so well? When journalist Steven Levy showed Bill Gates the first iPod, Gates' first reaction was, "It's only for Macintosh?" Gates saw the iPod through the lens of desktop computers; if the iPod connected only to Macs, it didn't pose a threat to Microsoft. What he didn't figure out was that the iPod would herald the iTunes Store, allowing Apple to become not only the most influential entertainment company in the world, but also the dominant software maker for mobile devices. Yes, the first iPod didn't work on Windows. In time, it would help render Windows irrelevant.

Indeed. This is a point that we've raised often before. Underdogs beat out big companies all the time, by changing the rules completely. When we talk patents, we hear people insisting that small inventors can't succeed because big companies will just "steal" their idea, but the simple fact is: if that big company recognizes the value in your idea, then you probably weren't going to succeed in the first place. The real innovators get responses like Gates' above to the iPhone. They come from so far out of left-field that the "big companies" don't see them coming (at all), even when they're right beneath their noses.

Filed Under: antitrust
Companies: google, microsoft

Newspapers' Plan For Survival: Charge Money, Beat Up On Craigslist And Keep Repeating To Ourselves That We're Needed

from the good-luck-with-that dept

There's been plenty of coverage about the potentially antitrust-violating meeting of newspaper execs in Chicago recently, and late last week reports came out about some of the recommendations put forth by the American Press Institute at that meeting. The API apparently handed out two whitepapers, both of which are amusing, only in that someone actually thinks they're useful. The first was effectively saying: "Craigslist really sucks, so let's try to beat up on Craigslist." The second, more thorough whitepaper, rehashes a bunch of debunked ideas about how newspapers should lock up their content in order to charge for it, including such gems as: "Establish that news content online has value by charging for it." Apparently someone at the API is unfamiliar with the difference between price and value. You don't establish value by putting a price on things. You are able to put a higher price on things by creating scarce value. But the industry isn't looking to do that. It's looking to pretend its content has value, by locking it up. Unfortunately for the newspapers (but good for everyone else), economics doesn't work that way.

Apparently part of the plan to get around anti-trust issues is to create an intermediary, sort of like an ASCAP for the newspaper industry, which suggests a near total misunderstanding of the differences between news and music -- but if that's where the industry wants to go, why not let them and watch smarter business folks mop up the mess for profit.

In the meantime, an absolutely fantastic teardown of the API's whitepapers comes from John Temple, the former editor, president and publisher of the now defunct Rocky Mountain News. If anyone were susceptible to the backwards looking "let's try to recreate the way things were" argument, you would think it would be him. But, instead, he responds to the API's reports by describing just how backwards looking it is and why it should scare anyone in the news business:

Imagine you're a young business school graduate trying to decide where you want to start your career. (OK, I know there are no jobs, but imagine it anyway.) You attend a newspaper industry summit and hear one of the big ideas from an organization at the heart of this world is to compete with Craigslist. What do you think you would think? Talk about an industry looking in the rear view mirror. Isn't that an idea that might have had legs, oh, maybe five years ago? How could it represent in the eyes of that young business school graduate any kind of exciting opportunity today? The advice boils down to, "Let's win back our business from the guy who's eating our lunch." How is the newspaper industry going to attract any of the best and brightest into its ranks if its ideas are stale, at best?

What might even be more troubling about this proposal is how newspaper people seemed to denigrate the Craigslist brand, when all they need to do is talk to people -- including in their own buildings -- to find out that most of those who've used the site seem to genuinely value it. Why? Because it gets results and it's free.

Temple also points out two big problems with the API's suggestions. The first is that it's suddenly trying to get people to pay for what they're used to getting for free -- without adding any additional value worth paying for. And, the second (though related) is that they're not actually looking to do anything really new or unique to embrace what the internet enables. While plenty of other websites and services are embracing the technological power of the internet, the best this report suggests is "people who work at newspapers should start experimenting with social networks":

Of course leaders should always be learning. That's a given. But are they serious? Isn't this a little late? If newspaper industry leaders aren't doing this already, do they really belong in their positions? Why should shareholders pay executives to learn all they can when they should be able to find ones who already know what they're doing? If people need advice like this, should they be running newspaper companies?

All in all, the meeting itself, and the recommendations from the API certainly show an industry that's not looking to compete or add value. It's looking for ways to rebuild the walls that let it exist without competition in the past. It's a recipe for suicide.

Filed Under: antitrust, charging, journalism, newspapers, plan, value