A bunch of folks have been submitting the story about how Jammie Thomas' new lawyer, Kiwi Camara (a Charlie Nesson protege) and Nesson himself are apparently preparing to file a class action lawsuit against the RIAA in an attempt to get back the $100 million plus that they claim the industry "stole" in its settlements. This may be interesting from an academic standpoint (or from a PR/circus standpoint), but I have difficulty believing it will get very far in terms of actually succeeding. I do find the settlements distasteful, and bordering on extortion ("pay up or we sue" is really questionable), but earlier attempts at similar lawsuits haven't gone very far at all. Still, considering that the RIAA has always insisted that its entire legal campaign was part of a grossly misguided and ultimately self-damaging "PR campaign" perhaps it's okay that someone is effectively doing the same thing on the other side.
The various music collection societies keep insisting that they're just the important middlemen helping make sure artists get the royalties they're due. Except, for some reason, they keep getting caught not actually giving that money to artists, but hanging on to it themselves. Billboard reports that the Dutch collection society, Buma/Stemra, is happily telling people that revenue rose by 2% last year -- though, oddly, the Billboard report leaves out one rather interesting detail. Reader Marcel de Jong notes that Buma/Stemra invested a bunch of the money it collected for artists into the stock market and then lost a chunk of it, so it's paying artists less money than it collected for them. What's unclear is if Buma/Stemra would have paid out more if it had made money... and also why it's gambling on the stock market with money it supposedly collected for artists.
Your U.S.A. cellular phone bill, since the early 1990s, has had a fee levied on it by governments for E911 services. The fee differed from state to state, and was ostensibly to fund the upgrade of 911 call centers. The public safety call centers were to be readied to receive location information from cell phones, and to use that information to instruct emergency crews. The cellular carriers were required to collect this tax for the government, but were also separately required to design, create, and deploy the (much more expensive) systems that can determine where the caller is. The government basically required the carriers to fund a public safety system (which you may or may not agree with). One thing with which none of us could agree was that the E911 taxes on our phone bills were promptly squandered by governments, for years, on just about everything except 911 call center upgrades. Money was mis-spent on ballpoint pens, conference attendance, dry cleaning, and boots.
Most of that is history; much of the US is now ugraded. (Please don't rely on E911, as it only works when you have a good cell signal, battery power, and a few other things. Don't use it as a crutch or as a "safety device"!) So what do you think will happen to those monthly taxes that were collected for so many years? Time to cancel them, right? Not so fast, says the State of Hawaii, which gets 66 cents of E911 fees from every monthly bill. This article in the Honolulu Advertiser shows how various government agencies are trying to get their hands on the "windfall." A few examples of this include: the Honolulu PD wants a new dispatch system for $20m, the Board that manages the fund wants their mandate extended to spend on other tech like VoIP location, the State hired a new Executive Director of the E911 fund for $294,421/yr, the legislature is taking $16M from the fund to help balance the budget, and some are trying to build new cell towers with the money. The article predicts future raids on the funds, and given what we've seen nationwide, we would agree.
What is it about this country that we can't just call a tax a tax. We seem to have an addiction to tucking and hiding fees into a wide range of services, where over time the fees have little to do with the services. Dear government: If you're going to tax me, please just do it up front, talk to me honestly, and say it's a tax. I want to feel you reaching into my pocket, instead of having you just skim the till behind my back.
Venture capitalist Fred Wilson has laid out his reasons for why he believes the IPO market is about to come back. It's a worthwhile read if you're interested in the startup ecosystem. While I tend to agree with Fred on many different things, on this one I'm not at all convinced. I do agree that there are a growing number of companies who in the past would have gone public about now, but are held back by the near total lack of willingness to risk running the IPO gauntlet. The one thing that we agree on is that investors are going to start looking to put money into new investments sometime soon (there's way too much money being flooded into the market, and it needs to go somewhere). I'm just not convinced it will go into the traditional IPO market. I think it would be good if the IPO market opened up somewhat, but a flood wouldn't be good. It would create another bubble scenario. My guess (at this point) is that the money will go into something unexpected -- perhaps even new financial instruments. However, I'm curious: where do people think all the money that's being dumped into the economy will flow? What's the next bubble going to be?
We've talked about the ridiculousness of the various music collections societies being involved in the discussions on new music business models. To them, the answer is always the same: add another license and let us collect it. They're middlemen and they take in tons of money and would only be all too happy to take in more. Some got upset with us in the comments, by noting that some of these collections societies are non-profits. In fact, the new Choruss offering, which we've already explained why it's a bad idea that's more of a bait-and-switch than anything useful, has been described as a similar "non-profit" collections group.
But, as we've noted in the past, supposedly nonprofit collections groups such as SoundExchange (a spinoff of the RIAA) are notorious for not finding artists to pay -- even some of the biggest names in the business. Oh, and did we mention that if the royalties go "unclaimed" the recording industry (via SoundExchange) often gets to keep the money? Given that bit of info, it's perhaps no surprise at all that P2Pnet is noticing that SoundExchange's own tax returns note that the nonprofit was sitting on over $100 million at the end of 2007, a pretty significant leap over previous years, and a somewhat startling sum for a supposed "nonprofit" in charge of both collecting and distributing funds.
It seems like those musicians sure are difficult to find.
The P2Pnet report also points out that it will be interesting to see how much SoundExchange has spent on lobbying efforts. SoundExchange is actually barred from lobbying the government, but has been ignoring that for years by funding musicFIRST, a recording industry lobbying group that's trying to add a new license for radio stations to pay (collected by SoundExchange, of course) by claiming that radio is actually a form of piracy.
So, even if Choruss or these other collections societies seem to be designed with the best intentions in mind (and I'm sure they are), it seems that they're wide open to abuse -- which is yet another reason to be quite worried about simply handing over the entire industry's business model to such an operation.
Harlan Ellison may be a well-respected writer, but he's got something of a history of threatening and/or suing anyone who he believes is unfairly profiting off of "his" works. You may recall a while back that he mistakenly sued AOL when he discovered that fans of his (not that he'd call them fans) had posted some of his writings to Usenet. Yes, to Usenet. Not to any AOL property, but to Usenet. However, since he'd discovered it via AOL, somehow they were to blame... so he sued. And a court quickly explained to Mr. Ellison the DMCA's safe harbors and the fact that Usenet isn't AOL. Ellison appealed... and, amazingly, AOL eventually settled just to make him go away, knowing that even though the courts would reject such cases under DMCA safe harbors (and common sense), it was cheaper to just pay up.
This wasn't just a one-off misunderstanding. Ellison has a long history of being economically and technologically illiterate about these sorts of things, as was made clear in this video that made the rounds a few years back:
In the video, he talks about how he doesn't take a piss without getting paid, and screams about Warner Bros. Studios asking if they can use a video interview he did in the DVD for Babylon 5, which he worked on -- and he demanded payment for it. When the woman pointed out that everyone else was doing it for free, he called them all assholes and then went on a rant about people doing stuff for free, talking about how he doesn't do anything for free. Apparently, he missed the fact that the video was already recorded, so it wouldn't be about any "work for free" because he wouldn't be doing any work. The work was already done. Also, depending on who shot the video, it's unlikely that WB actually needed to get his permission (or to pay him) to use the video, because he probably doesn't own the rights to it, but that's a separate point.
Either way, that's all prologue to the news that Ellison is suing yet again. This time, he's suing Paramount Pictures and the Writers Guild because he wrote an episode of Star Trek that aired in 1967, and Paramount hasn't paid him for certain Star Trek books that include elements from that show or other merchandise like a (not making this up) talking Christmas tree ornament. He's suing the Writers Guild because it apparently told him that he was nuts and they weren't going to take on Paramount over this issue (he's accusing the Guild of too narrowly interpreting its contract).
And, in classic Ellison fashion, his statement on the matter is all about the money:
It ain't about the 'principle,' friend, its (sic) about the MONEY! Pay Me! Am I doing this for other writers, for Mom (still dead), and apple pie? Hell no! I'm doing it for the 35-year-long disrespect and the money!
Given these antics and ridiculousness, you have to wonder just how many folks won't be hiring Ellison in the future, knowing he's likely to blow up and potentially sue them, as well. You also should wonder how much "money" he's missing out on from folks like me who will never buy any of his works. If it's "all about the money" perhaps someone who writes sci-fi like Ellison can think about the future a little bit, and how many opportunities he kills off by demanding every penny today at the expense of dollars tomorrow.
There have been plenty of stories over the years about the people who buy from spam, with various studies showing surprisingly high percentage of people admitting to buying from spam. Of course, that's just seeing how many people have ever bought from spam, rather than how many people respond to a single spam campaign. I've seen estimates before (usually in the range of a quarter of a percent), but very little actual data, until now. The latest research on the topic comes from some computer scientists at the University of California (both Berkeley and San Diego), who actually took over a zombie network to send out bogus spam and watched the fake orders roll in.
Except that they didn't actually get that many orders. They sent out 350 million spam messages, and received a grand total of 28 orders. The fake pharma website they set up just returned an error message when someone tried to place an order, so the actual numbers could be even lower. If any of the credit cards were fake or stolen, then you could imagine that a real spammer would bring in even fewer orders. Though, the real spammer would also likely send out many more messages as well. But, even accepting the researchers' numbers, they found that the full zombie network they used could probably bring in about $7k per day, or about $2 million per year.
That actually seems fairly low for a massive spam operation, and suggests that spam might not be as profitable as it once was (assuming that earlier reports on spam earnings were accurate). It would make sense that spam is becoming less and less profitable, as users become more sophisticated, and less prone to ordering from spam messages. There are still plenty of suckers out there, but once someone is educated not to buy from spam (or has a bad experience buying from spam), the pool of suckers declines rapidly. Of course, we all know the real profit in spam these days isn't in selling fake drugs, but in pump and dump stock scams anyway...
For years, Europe has been trying to push data retention rules, that require ISPs to hang onto data much longer than it's needed for any business purpose. Such data retention has plenty of problems, from the likelihood of abuse to the chance of inadvertent disclosure to the simple fact that sifting through more data often makes it more difficult to find the data you actually need. However, the biggest problem is the cost involved with data retention. It's rather costly to retain all that data for many ISPs, and for years ISPs (especially smaller ones) fought to make sure that any data retention laws also included provisions that would make the government pay for retaining the data. While some politicians in the UK have tried to shrug off the cost issue as not a big deal, it looks like it may leave a loophole that makes data retention in the UK basically meaningless.
The Register is reporting on a meeting the UK government held with various ISPs that left many of the ISPs baffled. Basically, they were told that they needed to start retaining data to stay in compliance with the law, but that since the UK government couldn't pay for it, many of the ISPs could get away without actually retaining the data. In other words, it sounded as if they said that, yes, you need to retain the data, but since we don't want to pay for it, maybe you shouldn't actually retain the data (wink, wink, nod, nod). So they end up giving lip service to the public about telling ISPs to retain data, but then since they won't fund it, it won't actually happen.
Matthew Yglesias points to a paper by John Quiggin (of Crooked Timber fame) and Dan Hunter that looks at the growing importance of non-financial incentives for the production of information goods. They point out that efforts like Wikipedia, free software, and the blogosphere are organized in a way that's fundamentally different from traditional for-profit enterprises. Many contributors participate for reasons other than financial gain, and the overall project doesn't have a centralized decision-maker the way Microsoft and the Encyclopedia Britannica do. The authors advocate the reform of legal institutions, such as overly restrictive copyright laws, that implicitly assume that creative works are always produced for financial gain.
This all seems right to me, and indeed, Hunter wrote a Policy Analysis for the Cato Institute (for whom I'm an adjunct scholar) that made some of the same points. However, I think the authors overstate their case, as suggested by the title of their paper, "Money Ruins Everything." I assume they intended this to be somewhat tongue-in-cheek, but they nevertheless do seem overly hostile toward commercial efforts. It certainly is true that in many cases, adding money to a volunteer effort will create more problems than it solves. For example, I've argued in the past that Wikipedia should resist the temptation to accept advertising because arguing about what to do with the money could begin to overshadow Wikipedia's organic editing process. However, I think they go overboard when they denigrate the value of venture-backed startups. They suggest that the investments of the dot-com bubble "may have rewarded their promoters, but they produced little of lasting social value, at least by comparison to the vast sums that were invested." But I think that if anything, the exact opposite is true. As we've pointed out before, the dot-com bubble was great for the economy at large, because it allowed people to experiment with a lot of new technologies and business models on venture capitalists' dime. Investing in a bubble may be a bad investment strategy, but the results are often good for the broader society. So of course we shouldn't adopt policies that hinder the success of non-commercial projects like Linux and Wikipedia, but we should also ensure that the legal system remains hospitable to commercial development.
The RIAA and its associated organizations certainly have a rather long history of not sharing the windfall from various lawsuits and settlements with the artists the RIAA likes to claim it represents -- and now those musicians are getting angry. Torrent Freak points us to the news that various managers and lawyers representing some big name musicians are discussing filing a lawsuit against the record labels for keeping all of that money. The record labels claim either that they are distributing some amount (if required to contractually) or that they're still trying to figure out how to "split" the money. Of course, they're also giving the usual story about how "after legal fees" there really isn't that much left to give out. Remember, though, when it comes to talk to the press or politicians, they'll swear up and down that these lawsuits are all for the musicians.
