Entertainment & Entrepreneurship

Last month the Federal District Court in Northern California answered a motion to dismiss in part of the litigation involving former Arizona State University and University of Nebraska quarterback Samuel Keller against Electronic Arts and the NCAA.  Electronic Arts tried to have its case dropped because it claims First Amendment rights to use the names and likeness of players, based on California case law. In particular, the decision of Kirby v. Sega, 50 Cal.Rptr.3d 607 (2006), found the First Amendment to bar publicity rights cases involving video games. While the appellate court in Kirby purported to apply the transformative test set forth by the California Supreme Court in Comedy III Productions, Inc. v. Gary Saderup, Inc., 25 Cal.4th 387, 391, 106 Cal. Rptr.2d 126, 21 P.3d 797 (2001), it essentially found the creation of a video game sufficiently transformative as to make every depiction protected by the First Amendment:

Ulala is more than a mere likeness or literal depiction of Kirby. Ulala contains sufficient expressive content to constitute a "transformative work" under the test articulated by the Supreme Court. First, Ulala is not a literal depiction of Kirby.. As discussed above, the two share similarities. However, they also differ quite a bit: Ulala's extremely tall, slender computer-generated physique is dissimilar from Kirby's. Evidence also indicated Ulala was based, at least in part, on the Japanese style of "anime." Ulala's typical hairstyle and primary costume differ from those worn by Kirby who varied her costumes and outfits, and wore her hair in several styles. Moreover, the setting for the game that features Ulala—as a space-age reporter in the 25th century—is unlike any public depiction of Kirby. Finally, we agree with the trial court that the dance moves performed by Ulala—typically short, quick movements of the arms, legs and head— are unlike Kirby's movements in any of her music videos. Taken together, these differences demonstrate Ulala is "transformative," and respondents added creative elements to create a new expression.

In Keller, by contrast, the court gave a very thorough analysis for a mere motion to dismiss. Although it cited to Kirby v. Sega once, it did not follow the blanket First Amendment protection Kirby provided to video games, instead sticking with the transformative test borrowed from copyright fair use by the California Comedy III decision. In particular, the Keller opinion suggests that the transformative test will go much further to look at the amount of transformation involved, rather than merely looking at whether the person is interjected into a video game environment.

EA's depiction of Plaintiff in “NCAA Football” is not sufficiently transformative to bar his California right of publicity claims as a matter of law. In the game, the quarterback for Arizona State University shares many of Plaintiff's characteristics. For example, the virtual player wears the same jersey number, is the same height and weight and hails from the same state. EA's depiction of Plaintiff is far from the transmogrification of the Winter brothers. EA does not depict Plaintiff in a different form; he is represented as he what he was: the starting quarterback for Arizona State University. Further, unlike in Kirby, the game's setting is identical to where the public found Plaintiff during his collegiate career: on the football field.

This certainly does not end the question of transformation. Stating that the work is not sufficiently transformative as a matter of law does not mean that a jury might not find sufficient transformation as a matter of fact, based on the evidence - only that the factual question will need to be litigated fully (and at considerable expense).

Undoubtedly this raises the stakes in this case and will likely lead to a very visible battle over blanket first amendment protection for communicative works like films and video games (which have First Amendment protection).

Personally, I favor a blanket rule that communicative works - films, books, publications and video games are exempt from publicity rights; goods, services and advertisements for same are per se violative of publicity rights without written permission; and the transformative test is for tee-shirts, souvenirs and similar items where the primary intrinsic value is the content on the item rather than the item itself. Such a rule would fix 95% of the publicity rights confusion.

Posted by Jon M. Garon at 07:47 PM | Permalink | Comments (0) | TrackBacks (0)

The Apple iPad has finally become official. The 9.7 inch screen provides an expanded platform for iPhone apps and features a proprietary chip selected to move beyond the present state of interface interaction with the Apple  A4 microchip.  The $829 version will have increased storage and 3G wireless connection for a $30.00 monthly fee.

More interesting are the features missing - the camera, the ability to run Flash, and removable storage and battery.

The most important aspect is the ability for the iPad to run the iPhone apps. This makes it a natural extension for the happy iPhone owners. The $30 monthly fee may not make iPhone owners happy to pay the additional charge, and it would make sense for AT&T to bundle service to the two devices. It positions Apple as a much more economically significant competitor to Microsoft then it has ever been before. When configured with an optional keyboard, it makes for a powerful competitor to Windows, something Apple has never before achieved.  Microsoft is trying to play catch-up with its Zune, but absent dramatic leaps in functionality, a Zune phone and tablet will have as much impact as the Zune music and video player has had the past two years.

The market response will be fast and furious. The price will likely be a ceiling on competition. The weight and functionality will also set a very high bar. But Apple is not alone. Amazon's recent decision to add apps to the Kindle will do little to make the single-function book reader into the competition. Microsoft will be trying hard with both Windows 7 devices and Zune compatible devices.

The greatest competitor is likely to be Android (or Android/Chrome) from Google. The platform has its own significant app base, a host of Google tools and of course the Google Book Search repository for the ebook experience.  There are no Andoid announcements yet. Give it a week or two and be prepared for a new paradigm in books and media.

Authors - time to start writing again.

The Android platform may provide

Posted by Jon M. Garon at 04:51 PM | Permalink | Comments (0) | TrackBacks (0)

In a recent post, I discussed the rather anemic FTC report on voluntary parental ratings and suggested that better standards are needed. The FTC has provided a much more pointed report on the concerns for virtual worlds, particularly regarding sexually explicit content in these worlds. The FTC Virtual World report includes the startling finding that "some virtual worlds designed for teens and adults allow – or even encourage – younger children to get around the worlds’ minimum age requirements."

Part of the difference between the two reports stems from the difference between sex and violence - sex can be obscene and is much more the focus of regulation. Violence is somehow more permissible in U.S. content. But sexually explicit material seems to pose a more obvious danger to children, particularly the youngest children. And sexual content comes from peer-to-peer interactions as much as from the creators of content, a more insidious form of abuse for the participant.

The findings, then are not surprising. The companies involved in virtual worlds are less responsive than their motion picture, video game and music counterparts. The voluntary efforts are less effective and more actively undermined by the companies in the field. This is certainly not true of every company and those who do well should be recognized. Parents should know more about their children's online activities and respond to those companies that intentionally cheat.

Ten-year-olds are told by their peers how to get past the controls on Facebook. (I know - it is amazing what the children in the back of the car will say, when the driver just listens without participating.) But the same behavioral advertising tools that allow vendors to know exactly when to send the birthday card seem never to be used to say "are you really three years older than you were when you signed up for the birthday club?"

The tools are available. A parent-centered behaviorial advertising model should be available to protect our children - even from themselves.

Does this sound like a First Amendment advocate has lost his focus now that his children are of that age? Not really. I'm not calling for virtual world police. But I am calling on the advertisers and publishers to give me tools to make my job easier and create presumptions of protection rather than presumptions of predatory conduct.

The default rules need to be designed to protect families; family profiles should enable computers to know who uses machines, so that when an under-age child logs on, the check against the family profile posted by me to my computer stops my child from lying about his age or at least sends me an e-mail asking if this is correct. The FTC also suggests that better language screening tools be employed for these sites and provides more suggestions.

Finally and perhaps most importantly, the 13-year-old line should not become the line of majority. Most of these sites should be adult-only sites. College students do not hang out with high school and junior high school students at dances or at the mall; neither should they do so online. Make sites more age specific. This may not necessarily 'clean up' high school virtual worlds, but it will at least separate out the activities among the peer groups.

More from the FTC:

“It is far too easy for children and young teens to access explicit content in some of these virtual worlds,” said FTC Chairman Jon Leibowitz. “The time is ripe for these companies to grow up and implement better practices to protect kids.”

The FTC surveyed 27 online virtual worlds – including those specifically intended for young children, worlds that appealed to teens, and worlds intended only for adults. The FTC found at least one instance of either sexually or violently explicit content in 19 of the 27 worlds. The FTC observed a heavy amount of explicit content in five of the virtual worlds studied, a moderate amount in four worlds, and only a low amount in the remaining 10 worlds in which explicit content was found.

Of the 14 virtual worlds in the FTC’s study that were, by design, open to children under age 13, seven contained no explicit content, six contained a low amount of such content, and one contained a moderate amount. Almost all of the explicit content found in the child-oriented virtual worlds appeared in the form of text posted in chat rooms, on message boards, or in discussion forums.

The Commission observed a greater amount of explicit content in worlds that were geared towards teens or adults. Twelve of the 13 virtual worlds in this category contained explicit content, with a heavy amount observed in five worlds, a moderate amount in three worlds, and a low amount in four worlds. Half the explicit content found in the teen- and adult-oriented virtual worlds was text-based, while the other half appeared as graphics, occasionally with accompanying audio.

Posted by Jon M. Garon at 08:49 AM | Permalink | Comments (0) | TrackBacks (0)

The FTC recently published its seventh report focusing on "violent entertainment products" that are available to children. The report focuses on the motion picture, music, and video game industries.  It reports generally good self-enforcement of the purchasing guidelines. Of course, at 80%, one of five attempted purchases goes through without objection. Toys-R-Us is singled out for even worse enforcement: "The Commission’s undercover shop found that retailers are strongly enforcing age restrictions on the sale of M-rated games, with an average denial rate of 80%. Only Toys ‘R’ Us lags far behind on enforcement (56%)." So the first lesson of the report is that otherwise savvy tweens who would rather not be caught dead in the Giraffe's den of lame childhood wonder, is that they can at least stop by to pick up the goods other stores won't sell.


The in-store enforcement does little to stop those non-adults with access to online accounts and gift cards to purchase anything they want without limit. The role of the store cashier has changed from that of gatekeeper to the monitor light on a freeway on-ramp. They moderate traffic flow, but will not stop the consumption.

I don't suggest that the non-adult ratings should be anything more than advisory for parent. On the other hand, I disagree with the line of court decisions which suggest that obscene material must be sexual to be obscene. Even under the auspices of the First Amendment, a society can identify that content which is so far beyond the acceptability on depictions of violence that the material is beyond First Amendment protection. This, along with requirements that any such obscenity label, must be fully adjudicated before any police action can take place against the content, should give states the right to declare ultra-violent material as obscene. Like sexual obscenity cases, the actual cases should be rare and the evidence 'beyond a reasonable doubt' because of the potential criminal enforcement.

Without the ability to identify content as obscene, the parental guidelines do little to manage content. They provide some helpful information for our under age and adult consumers. They are like food labels. They make us feel guilty after we have binged, but probably have little impact on what we actually consume unless we individually choose to follow them.

I look forward to next year's report. It is nice to know some things won't change.

Posted by Jon M. Garon at 09:25 AM | Permalink | Comments (0) | TrackBacks (0)

The Federal Trade Commission announced this week fairly sweeping changes to the
FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, which "address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers." Under the FTC Act the FTC has the power to stop unfair trade practices and fraudulent advertising.

The Guides, last updated in 1980, have been updated to reach commercial endorsements hidden as consumer comments on blogs and in social media. 

According to the FTC "The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement" which will make the blogger obligated to disclose the payment (whether cash, free products or other inducements). The new Guides codify the existing policy that both the advertiser and the endorser may be liable for false or unsubstantiated claims.

In addition, the 'results not typical' ads should disappear. "Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.

The result of this change is yet another indication that the days of the Web's Wild West past are disappearing. But for those of you who like your content wild and unsubstantiated, there remains hope. The Web is a very big territory and the FTC will be hard pressed to enforce its new policies.  The rules have become much more rational, but it will take time and investment to make the reality on the ground (or on the virtual terrain) match the rules on the books.

Posted by Jon M. Garon at 09:44 AM | Permalink | Comments (0) | TrackBacks (0)

The Wall Street Journal today reported that Disney is providing stock and cash to acquire Marvel Entertainment, in a deal reported to have a $4 billion total value. The transaction, which will garner antitrust scrutiny, will likely be one of the largest realignments in tent-pole film production.


Marvel has been the inspiration for summer blockbusters for at leas the last decade, and it owns thousands of characters with potential for films, television, Internet, theme park and product lines. Disney has done a better job than any company in maximizing the return for its copyrighted characters, so the combination will reach much further than the slate of the summer blockbusters.

Though not discussed by the Wall Street Journal is the extent to which Disney hopes to use the Marvel content to redevelop its web strategy, including a pay model for premium content on its exclusive pages. The ownership of the popular Marvel characters will shift Disney's median demographic up to the peak Internet age, adding content to its delivery system.

Marvel already has licensing deals for a number of its characters with Fox, Sony and Paramount. The existing relationships will slow regulatory approval, but are unlikely to halt the transaction, given the level of competition in the industry and the lack of market power held by any of these companies.

The full impact of the transaction will take years to play out on the silver screen, but Disney has been very savvy at maximizing value from lesser characters and ancillary markets. The potential is for web-based content and merchandise to begin appearing later this year.

Not only has this increased the value of Marvel, but it is likely to be a boost to its competitors as well. Interesting how the comic book is the one publishing sector growing in the Internet age.

Posted by Jon M. Garon at 10:19 AM | Permalink | Comments (0) | TrackBacks (0)

On July 22nd, the 40th anniversary of Comic-Con will grace San Diego with its assortments of Wizards, Warlocks, Elves, Demons, Vampires, Warriors, along artists, writers, software programmers, and filmmakers. A funny thing happened to the costumed prom for geeks and freaks - the event has grown into the cultural touchstone of new media.

The film program feature over sixty films - not counting the special screenings and other film events outside of the competition. (Self-interest disclosure: My client, Derrick Comedy will be presenting a panel and more regarding their upcoming release of Mystery Team.)

The striking aspect of Comic-Con's breadth is the way in which Internet culture has shifted towards Comic-Con's agenda. Comic books are not necessarily a larger industry than at other times in history. Comics have waxed and waned in different eras. But comics do not lend themselves to e-book readers and may have some resilience to avoid digitization. At the same time, comics have come to dominate epic film making. Comic books are inherently visual and easy to conceptualize on the big screen. Filmmakers should never give screenplays to prospective investors. They are simply too difficult to translate into the finished product and tend to read very flat. Comic books, on the other hand, translate the power and pacing of film on the page.

In addition to film, comic books translate elegantly into video games and virtual worlds, an increasingly critical aspect of modern culture. Comic book characters have come alive on game consoles and computer screens for years. With better avatar software and increasingly interoperable software platforms, the superheros, villains, monsters and myths are freeing themselves from their creators' formats to populate computers and devices of the audience's choosing.

So look to Comic-Con as a the new harbinger of taste. And remember to sharpen your broadsword.

Posted by Jon M. Garon at 09:51 AM | Permalink | Comments (0) | TrackBacks (0)

For two tortuous years, The British-based Virgin Megastores remained the largest music-only based chain. But the sales of CDs have dropped by half since 2000, iTunes has grown to control 20% of the market, Amazon has taken 8% of the market while WalMart and Target continue to stuggle to maintain their market share. Tower Records demise in 2006 merely heralded the dramatic transformation of music sales. With the sale of the last New York and Los Angeles Virgin Megastores, the chain will leave the U.S. It still has over 100 stores worldwide.

Rollingstone does find a glimmer of a silver lining in the long lines outside the 14th Street store as people pick up deeply discounted discs for their collections. But this silver lining is thin indeed. The economic downturn has put pressure on music sales and live ticket sales. The industry's strategies to stop illegal downloading have failed. As CBS news pointed out, the top album in 2000 had a 3.6 million CD sales opening week. This year's Green Day achieved the goal with 600,000 units. ('N Sync's No Strings Attached sold 9.9 million in 2000; Lil Wayne's "Tha Carter III" sold 2.88 million in 2008 - the first time the top album was below 3 million, according to Billboard. Coldplay's  "Viva La Vida or Death and All His Friends" followed well behind at 2.15 million.)

Ringtones, video games and other music genres are replacing some of the revenue streams, but the shuttering of Virgin Megastores should not go unnoticed. Today may not be the day the music died, but we've lost a friend nonetheless.

Posted by Jon M. Garon at 08:23 AM | Permalink | Comments (0) | TrackBacks (0)

One of my favorite business rules comes from an old scouting lesson:  A bear jumps out of the woods and begins chasing the campers. Everyone runs in fear. A boy shouts to one of the girls, "I'll never be able to outrun that bear." "Don't worry," she replies as she passes him, "You just have to outrun someone else."

Smart businesses know that to succeed they need to outrun at least some of the competition, but they do not necessarily need to outrun all of it. We see a reminder of this in the recent launch of both Microsoft's Bing.com search engine and Palm's new smartphone, the Pre. In both cases, analysts have focused on the new products ability to topple the industry leaders - Google and Apple, respectively. But this is the wrong question.


But in less than a week, Bing has moved to surpass Yahoo in search, giving Microsoft a healthy market share and a chance to compete with Google. The Palm Pre has caught the attention of a loyal Palm following, a large swatch of IT departments unwilling to go down the ultra-proprietary Apple path, and even Verizon which intimates it will have its own Pre device in coming months. For individual buyers, the Sprint-Pre package has been reported the best value of smartphone now on the market.

So sure, Google and Apple will retain their place atop the leader boards. But the twin assault on Google may make it refocus on its core business instead of investing in Android.

For Yahoo, Google's Android division (and perhaps even Blackberry), the bear may just be getting a bit closer.

And with the slate of new and different devices coming out of Computex, the Tiawan computer show, the race from the bear (economy- that is) may be more confusing than ever.

Posted by Jon M. Garon at 07:57 AM | Permalink | Comments (0) | TrackBacks (0)

Led by Paul McCartney and Ringo Starr, E3 hosted a press conference for the September release of The Beatles: Rock Band. The game will be available for Playstation 3, X Box 360 and Wii, so everyone can get together and play the game.

The graphics range from stunning to strange as we experience the Beatles move from their 1964 Ed Sullivan barnstormer image to the psychedelic image of the '70s. Even more exciting may be the replica instruments, including brand name guitars and the logo-emblazoned drum kit.

The dedicated website explains it all:


Rock Band Beatles Trailer from E3 featuring Gameplay

The "game" may be less a platform for the current generation of gamer rather than a digitized re-imaging of history. With powerful graphics, games like this may become the next battleground on the "truth" of history. Academics might not view the history of The Beatles as the same as the Civil War, but all history is selective and written by the victors.

Playing with history may be taking on new meaning.

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

Earlier this month, California asked the United States Supreme Court to hear a case concerning the constitutionality of its statutory prohibition to the sale or rental of violent games to minors.  At the district and federal court level, the case law has been uniformly against the position taken by Governor Schwarzenegger. In each case, the courts have found that video games are entitled to First Amendment protection and that the exceptions to the free speech rights of the video game producers (and their users) simply do not extend the concept of obscenity to obscenely violent games.

Of course, it was not all that long ago that the First Amendment was even applied to mere entertainment. (See,  Playing in the Virtual Arena: Avatars, Publicity and Identity Reconceptualized through Virtual Worlds and Computer Games, http://ssrn.com/abstract=1334950.) But as video games have become more realistic, the distinctions between games and other traditionally protected forms of speech - novels, music, photography and film - have dropped away, providing video games the same level of protection as other forms of entertainment.

To enable the cities, counties and states to regulate the video games, clever politicians drafted statutes that closely mirror obscenity laws in crafting anti-violent game laws. California's summary is typical:

California Civil Code sections 1746-1746.5 prohibit the sale of violent video games to minors under 18 where a reasonable person would find that the violent content appeals to a deviant or morbid interest of minors, is patently offensive to prevailing community standards as to what is suitable for minors, and causes the game as a whole to lack serious literary, artistic, political, or scientific value for minors.

As explained in California's brief before the Supreme Court, "[t]he respondent industry groups challenged this prohibition on its face as violating the Free Speech Clause of the First Amendment. The court of appeals affirmed the district court’s judgment permanently enjoining enforcement of the prohibition."

Similar statutes have been struck down in every case. Instead, the industry relies on voluntary labeling. As an alternative, voluntary labeling is little more than a political figleaf.  Voluntary labeling restrictions do little to discourage the purchase or rental of these games. Increasingly, the point of purchase for these products is through a computer download which gives parents little opportunity to review the content or discuss the appropriateness with their children.

So this returns us to the core question: should there be a legal standard for obscenely violent content, either for adults or for children? In my earlier article, Playing in the Virtual Arena, I made the following comment:

“[The Appellate Courts refuse] to label graphic content “obscene” to minors, finding that historically only sexual content can be deemed obscene. In doing so, the [courts reject] the attempt to make a new category of unprotected speech for violent content that is sold to minors, despite the lawful regulation of non-obscene sexually explicit content sold to minors and commercial advertising directed at minors. …

 

“While it is axiomatic that obscene materials (which have no constitutional protection for any reader) can be banned for children, the Supreme Court recognizes the state’s interest in protecting children from harmful speech that is beyond regulation for adults. While a modern court may demand a more substantial standard than that of Ginsberg, the interest in protecting minors from harmful content has not been repudiated.”

The simply phrased question presented to the Supreme Court is asking that this question be revisited. When California asks "Does the First Amendment bar a state from restricting the sale of violent video games to minors?" it is asking whether violence can ever be treated the same as obscenity.

As a frequent world traveler, I see media from across the globe. Many countries are much more comfortable with nudity and sex than we in the United States. Those same nations are shocked at the level of violence in our media.

I hope that the Supreme Court looks carefully at the question. I am distrustful of any government regulation of content and believe in a very expansive First Amendment. But the notion that violent content, no matter how repugnant is protected speech, while judicial panels can draw distinctions regarding levels of pornography simply makes no rational sense.

The question should be brought to the attention of the public. Certiorari should be granted and the debate engaged.

Posted by Jon M. Garon at 03:23 PM | Permalink | Comments (0) | TrackBacks (0)