According to a story by AP writer Peter Svensson, AT&T, Inc. (ATT) will begin forwarding notices of illegal trafficking in pirated music to customers whose IP address has been identified by the RIAA.  This approach replaces the notorious lawsuits brought by the RIAA against individuals involved with illegal file sharing.

As an attorney who represents artists who fear a loss of their profession to illegal downloading, as well as a writer, my sympathies are decidedly with the copyright holders. So it may be surprising that I’m very pleased with the quite moderate approach reportedly taken by AT&T.

According to the article, AT&T will forward the warnings, but it will not employ a three-strikes policy of terminating accounts for those individuals who have received three notices. Jim Cicconi believes that the notices are sufficient to accomplish much of the RIAA’s goals. According to AP, “AT&T will only forward the notice and won't threaten its customers with suspension of service or any other sanction. If copyright holders want to go further, it's up to them to bring court orders.” Cicconi added, "it seems to engender a good response from customers, and we've seen a fairly dramatic drop-off in file-sharing activity once people receive a notice, so we feel this works."

The Electronic Frontier Foundation has been critical of the RIAA, both because of its now abandoned litigation strategy and its agreement with ISPs to drop repeat offenders. But the effectiveness of iTunes and Amazon’s downloads are a direct result of slowing the growth of free, on-demand unauthorized music distribution. At some point, the public has become convinced that it isn’t worth the savings of $.99 to risk thousands of dollars in copyright damages.

The suggestion that the ISPs are unable to incorporate the three-strikes rules into their terms of service agreements is wholly misplaced. Most already require users abide by a host of rules to protect from unauthorized conduct. 

So this is why I am impressed by AT&T’s approach. While doing less than it can, it is taking action to educate its customers and reduce illegal downloading without adding to the hysteria around copyright policy. Parents will have the ability to learn about their children’s use and misuse of the home computer; unauthorized activity on open networks can be curtailed; and the relatively few aggressive pirates can be identified.

As has often been the case with copyright throughout history, most enforcement comes from establishing acceptable norms of behavior and educating the public. As technology changes and new norms develop, the expectations shift. AT&T’s approach will serve as a good example of how to build these norms and improve satisfaction for both the customer and the copyright holders.

Posted by Jon M. Garon at 08:53 PM | Permalink | Comments (0) | TrackBacks (0)

In a previous post, I described my assumptions about the end of the printed newspaper. Now I’m not predicting a particular date certain when this will happen – and I’m certainly not alone in this prediction – but I want to suggest two new services that will hasten this end by proving benefits for the user that overcome the drawbacks of digital print media.

Tie Daily Newspaper to Daily Medications

The first suggestion is based on an “ageist” assumption that newspaper readership skews significantly to an older audience. If this is true, and if it is also true that newspaper readership is a daily habit, then I suggest that the Kindle, Sony eReader, iPhone or other device include a “daily medication” feature.

Proper daily dosing is a significant problem for health care. If your daily paper reminded you to take you pills, it would provide an important personal service. More significantly, if senior citizens could let their adult children (or out-of-home nurse) to know that their pills were taken each day, the person’s health outcomes would improve. The health care savings would easily pay for the cost of the devices, so that the adult children or insurance companies might even pay for the devices in exchange for agreements to sign up for the service. (I would also insist that the enrollment forms limit the use of the behavioral data. Insurance companies, for example, should be barred from adding punitive premiums for those who do not use the devices or skip their pills.)

There are other privacy issues that need to be regulated, but the medication data is already being utilized for behavioral advertising, so this usage only makes the privacy intrusion more obvious, so consider it a form of forced transparency.

Add Digital Coupons

The second suggestions extends the experiment of the airline industry to remove the last bit of paper from the e-ticketing system for domestic flights. One can now download a two-dimensional, encrypted bar code for an iPhone, Blackberry or other web-enabled device and use it to board an airplane. Gate agents can scan the screen in lieu of the paper ticket. The airline experiment tends to fizzle since most TAS officials require paper to scribble on as part of the screening process.

Grocery stores and other coupon companies have no security limitations. Newspapers can continue to tie special savings to their daily delivery of news and information. The newspapers could allow customers to “clip” the relevant coupons to a digital wallet that can be displayed on the device and scanned, keyed or wirelessly uploaded at checkout. Again, the cost savings from eliminating print coupons (and reducing the photocopying fraud that plagues grocery stores) would more than pay for even free give-aways of the devices.

Free Readers from the Pharmacies

Given the twin suggestions, I propose that pharmacies – which both accept grocery coupons and sell prescription drugs – be the source of free newspaper readers. If I’m right, then either Target or WalMart will shortly be offering free readers – which accept only their store coupons on course. Everything free comes with a price.

Posted by Jon M. Garon at 06:00 AM | Permalink | Comments (1) | TrackBacks (0)

A new piece of legislation has been proposed by Senator Benjamin Cardin of Maryland (D), in which he hopes to provide an additional business model for newspapers.

The Newspaper Revitalization Act would allow newspapers to operate as non-profits, if they choose, under 501(c)(3) status for educational purposes, similar to public broadcasting.  Under this arrangement, newspapers would not be allowed to make political endorsements, but would be allowed to freely report on all issues, including political campaigns.  Advertising and subscription revenue would be tax exempt and contributions to support coverage or operations could be tax deductible.

The measure is targeted to preserve local newspapers serving communities and not large newspaper conglomerates.  Because newspaper profits have been falling in recent years, no substantial loss of federal revenue is expected.

 Not too long ago, Jacob Weisberg wrote in Newsweek, lamenting the troubles of the newspaper industry.

The sorry predicament of the newspaper industry has given rise to a testy argument about journalism's future. In one corner are editors who believe news organizations committed a fatal mistake by giving their content away for free on the Internet. These people think that a successful digital business model demands revenue from users as well as from advertisers.

Another camp favors philanthropic support … more like universities, with their independence underwritten by charitable endowments. A third faction, which includes most Web journalists, doubts both those models and looks to online advertising for sole support. The New York Times now draws about $200 million in annual revenue from Internet ads—not far short of the cost of its global editorial operations. Without a print edition, the Times would be smaller business, but quite possibly a better one.

In presentation I made last week, I mentioned what I see as the eventual future of the newspaper:

• Physical delivery has been fully eliminated [or disintermediated to keep with the theme of my presentation]

• Kindle, micro-laptops and ever-lighter readers will put digital papers on kitchen tables and in bathrooms

• Consolidation

  • 2-5 national papers

    Network of local content providers (which in some cities will provide local content for all nationals)  

The specifics of the Newspaper Revitalization Act will need to be changed. There is simply no reason to provide newspapers a better tax arrangement than the arrangement available to public broadcasting or educational institutions. Advertising revenue should be treated as taxable income just as it is in the other media. But this will not create problems for those newspapers which choose to become tax exempt charities, since the taxable income will be offset by the companies operating expenses.

For many communities, physical delivery of newspapers will continue to be important for the next few years, until the technologies for digital paper make these devices cheaper, lighter and easier. But the time will be coming. The new legislative proposal is just another milestone on the road.

Posted by Jon M. Garon at 07:23 AM | Permalink | Comments (1) | TrackBacks (0)

I have been a fan of the Palm for many years, and like many I miss my Treo. It worked. The contacts were always available, the web applications were nicely integrated, and I actually prefer a stylus to buttons or my fingers. (More specifically, I prefer a stylus whenever my children borrow my phone and rub chocolate, peanut butter or mud over the screen.)

So I am hoping that the new Palm Pre breathes new life into Palm. 
According to the New York Times, "Palm reported smartphone revenue for the quarter ending Feb. 28 declined to $77.5 million, from $171 million the preceding quarter. Its net loss of $94.7 million was its seventh consecutive quarterly loss."

Will the Pre be enough to return Palm to a meaningful contender dominated by Apple's iPhone and Rim's Blackberry? No. Sorry.

But as the Washington Post described Sprint as continuing to "hemorrhage subscribers who have flocked to rival wireless carriers."

The iPhone significantly benefited AT&T but unless the Pre is a miracle, the third entrant into the modern smartphone battle will be unlikely to convince consumers to switch to a carrier that is dying on the vine. Instead, the carrier may be the most important consideration regarding the choice of smartphones. So long as Palm stays with its exclusive relationship with Sprint, the potential market will be quite limited.

Making the WebOS interface better than iPhone or Blackberry will be a challenge, particularly since Apple will be launching its third generation software around the same time as Palm finally gets its products to market. Palm also promises additional products built on the WebOS, but none of these have been demonstrated yet.

I really hope Palm finds a strategy to succeed. But a good strategy requires understanding the customer needs, not just building a better product. Poor alliances make for very poor launches. 

Perhaps it isn't too late? Here's hoping.

Posted by Jon M. Garon at 09:47 PM | Permalink | Comments (3) | TrackBacks (0)

 Data mining, deep searching, and other clever names are being developed for the process of looking into the "deep web" - the other 90% of the content stored and retrievable on the Internet. Of course, much of that information should not be retrievable by everyone.

So for those of us not ready to 'get over it' and concede that our information is an open book, EPIC has shot the first salvo at the largest of targets:

EPIC Petitions FTC to Investigate Google, Cloud Computing Services

EPIC has formally asked the Federal Trade Commission to open an investigation into Google's Cloud Computing Services -- including Gmail, Google Docs, and Picasa -- to determine "the adequacy of the privacy and security safeguards." The petition follows the recent report of a breach of Google Docs. EPIC cited the growing dependence of American consumers, businesses, and federal agencies on cloud computing services, and urged the Commission to take "such measures as are necessary" to ensure the safety and security of information submitted to Google. Previous EPIC complaints have led the Commission to order Microsoft to revise the security standards for Passport and to require Choicepoint to change its business practices and pay $15 m in fines.(Mar. 17)

Google does many good things, but it is still an advertising company dedicated to finding out about consumer behavior and tailoring expensive advertising towards its users. Advertiser scrutiny is increasingly important, and I expect this action will grow in the coming months.

Stay tuned.

Posted by Jon M. Garon at 11:53 AM | Permalink | Comments (0) | TrackBacks (0)

I am a big fan of the book Nudge by Richard H. Thaler Cass R. Sunstein. The book highlights the way in which social architecture - everything from how questions are phrased to default rules shape our behavior.

The Chronicle of Higher Education today reported on a very effective "nudge" example. According to the article, Students Stop Surfing After Being Shown How In-Class Laptop Use Lowers Test Scores, "professors increasingly frustrated by students who use laptops for non-class activities--like updating their Facebook pages--may be heartened by news from the University of Colorado at Boulder. A professor there has found that educating students about the negative effect that frivolous laptop use has on their performance reduces class time spent going walkabout on the Web."

Engingeering Associate Professor Diane Sieber "identified 17 students in one of her classes who were using laptops most frequently. After the first test, she told them that they did 11 percent worse, on average, than their peers who did not have their faces in their computers as much."

When the default position was that all uses of the laptop were accepted, students used them for everything. When students were educated regarding the appropriate uses and warned of the intrinsic consequence of the laptop misuse - the misuse declined.

Professor Sieber did not bar the laptops, but in Nudge's terms used "libertarian paternalism" to educate the students on the effect of their behavior and give them the opportunity (but not the obligation) to expect better behavior.

There are many examples (just read the book). But the application to both technology norms and educational defaults will fill many new books to come.

See www.nudges.org for some of the newest applications. 

Posted by Jon M. Garon at 07:42 PM | Permalink | Comments (0) | TrackBacks (0)

I discovered the Te Tumu Whakaata Taonga or  New Zeland Film Commission Guide-- Backend Money - A Guide to Movie Money Flows. The New Zeland Film Commission explains the purpose of the Guide:

This report was commissioned by Investment New Zealand to illustrate how money flows from a movie or television programme back to those involved in its production. The media are constantly reporting multi-million dollar box office successes, million dollar-an-episode fees for cast members on US series like FRIENDS or an A-list star's valuable piece of the "back end". The dollars being generate by film and television, especially large studio productions, appear to be making a lot of people very rich. But what do these figures really mean? What exactly is the 'back end' and who gets a share of it?

This report, written from the perspective of industry knowledge of both industry members and policy makers in New Zealand, is designed to guide the reader through this maze of players and shed light on the roles they play and the way their involvement influences the 'back end'.

The report does not offer a definitive description of how the global industry works. Nor does it purport to represent all the permutations and combinations of the commercial deals and legal arrangements existing within the industry that can improve a 'back end' deal.

 I have never found a better outline. And that's hard for a book author to admit. The Guide should be reviewed by every filmmaker before meeting with sales agents. 

Good Luck!

Posted by Jon M. Garon at 09:47 PM | Permalink | Comments (4) | TrackBacks (0)

According to an article in Variety, Author Clive Cussler has been hit with legal fees of Crusader Entertainment, producer of the film adaptation of Cussler’s Sahara. The order is $13.9 million (shaved from a requested $18 million. Variety estimates Cussler’s own fees at nearly as much.

The lawsuit stemmed from Cussler’s claim that he was improperly denied script approval. Crusader countersued claiming Cussler’s sales figures had been inflated. Variety listed the revenue at a mere $69 million against a reported $160 million production budget.

Having taught entertainment law for over fifteen years, I read of this litigation in awe and revulsion. There simply are not enough problems to be litigated, depositions to be taken, or egos to be stroked to justify $28 million over a contract dispute.

If anyone wants to know a good lawyer joke, we just found the punchline.

Posted by Jon M. Garon at 09:36 PM | Permalink | Comments (0) | TrackBacks (0)

For those of you in the Twin Cities area, I wanted to mention a program on these topics next week. The program is very inexpensive.  Following the program, I'll post the powerpoint slides and possibly a Podcast of the conversation (technology permitting). I hope to see you there.

Art & Entertainment Law Section CLE Socially Networked Media and Our Entertainment Clients

1.0 hour of Standard CLE credit applied for

Posted by Jon M. Garon at 12:27 PM | Permalink | Comments (0) | TrackBacks (0)

For those of you who could not make it to Sundance and have not been to New York lately, you may wish to check out the special preview of Mystery Team.

Posted by Jon M. Garon at 04:24 PM | Permalink | Comments (0) | TrackBacks (0)

My last post commented on the extension of the Kindle into the iPhone through a new book reading app. Not that I want to keep harping on Amazon, but it does seem appropriate to mention

According to the Wall Street Journal, GameStop stock “plunged 14% Thursday after the news.” The drop was more than half of its 26% rise this year, bouyed by the growing sense that video games were the new entertainment medium that was  recession proof. Evidently Amazon feels the same way, and it recognizes that there is enough money in used games to take a significant position.

All the more troubling for Gamestop is the fact that the stock drop was based on a single announcement from Amazon.

Posted by Jon M. Garon at 04:10 PM | Permalink | Comments (0) | TrackBacks (0)

Amazon.com released an iPhone app to allow its Kindle subscribers read on their ever-present phone if they do not have the Kindle device with them. It also allows the millions of iPhone and iTouch users to have the Kindle formatted books on their smaller devices.

Most articles have reviewed the devices, but I'm more interested in the business models. As I've described in my article Reintermediation, Amazon represents the most aggressive business model for vertical integration and active outreach to its customers.

So why would Amazon voluntarily drop its monopoly on the Kindle format by extending it to its greatest competitor? Because it makes good business sense. 

  Of course, Amazon is betting that its specialized device is a better book reader than the iPhone can be. Amazon should be able to bank on that assumption or it should never have built the Kindle in the first place. But bravado is not reason enough to risk its monopoly position.

If Amazon loses the reader battle, it still wins. Kindle's proprietary format makes its publishing service the preferred format for the iPhone. To the extent it works well, it solves technical and aesthetic problems that Adobe and open source authors should be trying to fill. (I would also expect Amazon to eventually provide free or very low cost Kindle books published from the public domain - a competition to Google's book project.) At each step, Amazon becomes the source for the content.

Moreover, the key feature of the iPhone tool is the synchronization of the file, so that one can switch between the Kindle and the iPhone without losing one's place in a book. This feature promotes the intended relationship of Kindle to other devices. The Kindle is positioned as the primary reading tool with features that allow readers to read casually with the iPhone or other devices. Just as the iPhone has yet to become the primary way to watch video content (at least for most of us), it extends televisions and computer monitors to the always available model. Amazon is hoping to keep published books relevant to this same audience and make available the same behavior.

When watching business models, following the money remains the key axiom. Amazon's revenue is on the publishing end. Specifically, Amazon will make the most money with books written with Kindle in mind. Extending the Kindle to the iPhone creates a tremendous motivation for authors to forego traditional publishing houses and promote themselves directly for the Kindle and iPhone.

Amazon's reach into publishing has grown significantly with this little app. Readers, educators, and those who promote literacy should see this as a watershed moment to reassert "books" (soon to be as archaic a term as albums) into the mobile culture.

Only publishers and booksellers should be very worried. There just isn't much room for them in the Kindle world.

Posted by Jon M. Garon at 10:29 AM | Permalink | Comments (0) | TrackBacks (0)

This morning the E-Commerce Times wrote a nice article regarding the Kindle controversy for its text-to-speech functions. Since I'm quoted, I'm taking the liberty of reprinting below.  What is important to me is that this is not a copyright controversy - it is a controversy over contracting practices. Some authors have the ability to sell their audiobook versions and don't want to give them away for free; other authors don't have any market for their audiobook versions and still don't a lame computer generated version of their work being promoted.

Authors (and others) need to have the ability to retain how their works are presented to the public. The power of exclusive rights gives authors the ability to negotiate these contracts. I think the reason Amazon changed its position so quickly was that it understands this is neither a copyright issue nor a technology issue. The question is whether Amazon will treat its authors respectfully. Amazon's actions suggest that it might be a fairly good partner. If that is the case, then everyone wins.

Amazon: Only Copyright Holders Can Unzip Kindle's Lips

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By Erika Morphy
E-Commerce Times
Part of the ECT News Network
03/02/09 1:15 PM PT

Whether fair use provisions of copyright law give Amazon the right to let its Kindle 2 voice robot read books out loud may never be known. The e-commerce giant is apparently more interested in creating a welcoming climate for the Kindle than sticking to its guns. After authors and publishers objected to the feature, Amazon decided to let them choose whether to offer it with their material.

Posted by Jon M. Garon at 10:10 AM | Permalink | Comments (1) | TrackBacks (0)