Digital culturus interruptus: Right here, right now, the almighty copyright finally comes home to roost

Digital culturus interruptus: Right here, right now, the almighty copyright finally comes home to roost

Summary: Sooner or later, it was bound to happen. Like teenagers biologically programmed to step across every boundary put in place by their parents, the digerati, equipped with the constantly evolving tools of their trade (everything from YouTube-like video sharing sites to widely available hacks of anti-piracy systems), have been been running a full-court press, brazenly subjecting the limits of the analog world to the most extreme of tests.

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TOPICS: Legal
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Sooner or later, it was bound to happen. Like teenagers biologically programmed to step across every boundary put in place by their parents, the digerati, equipped with the constantly evolving tools of their trade (everything from YouTube-like video sharing sites to widely available hacks of anti-piracy systems), have been been running a full-court press, brazenly subjecting the limits of the analog world to the most extreme of tests.

Along the way, there have been many casualties. Everyone from a 12-year-old honors student that lived in a New York City Housing Authority apartment (sued by the RIAA for file-swapping; the suit was eventually dropped) to the multi-billion dollar music conglomerate that knuckled-under to Steve Jobs thanks to Apple's near sole control of the paid music downloads business.  US trustbusters need to get on Apple's case instead of politicking in Europe on the company's behalf. But that's another story.

But compared to the gauntlets thrown down in 2007Q1, that water under the bridge will likely be viewed as little more than collateral damage in the analog world's desperate attempt to preserve more than a shadow of itself in tomorrow's fully digitized culture. 

One billion dollars. Do you think that's a lot for a copyright suit? Think again.

Thanks to today's news regarding Viacom's $1 billion copyright infringment suit against Google (more coverage on Techmeme), we now have three watershed events in one quarter that couldn't better exemplify (and quantify in dollars) the gravity of digital evolution, the futile attempts to resist that nature, why legacies hurt so badly, and the extinction that will result. What were the other two? In no particular order, one was Microsoft's "blistering attack on rival Google for what the software giant [argued was] the Web search leader's 'cavalier' approach to copyright protection." The other event was the recent implementation of a decision that was made two years ago by the Copyright Royalty Board (CRB), the judges of which are appointed by the Librarian of Congress which also happens to oversee the U.S. Copyright Office.

There was probably a bit of a collective laugh when Microsoft first levied its criticisms at Google. After all, isn't Microsoft one of the digital age companies that wants to lead the world out of the analog age? If it's not out in front of Google, shouldn't it, at the very least, be bringing up the rear? But in reality, Microsoft's criticisms are very consistent with the company's behavior and technologies over the last several years. The company's chief executive Steve Ballmer minces no words in describing Microsoft as a company rooted in intellectual property rights and, at a fairly significant expense to the company, has sought to settle many of the outstanding IP infringement suits brought against it. Microsoft could hardly ask others to respect its intellectual property if it itself wasn't prepared to respect the intellectual property of others. For those suits Microsoft isn't settling or won't settle in the future, one can only assume that Microsoft sees frivolity in the claims against it (I'm not here to pass judgement on the merit or lack thereof in those claims).

Microsoft's technologies that look to protect copyrighted work from being illegally reproduced and distributed, particularly on the digital rights management front, are also clearly consistent with the company's stated belief in intellectual property rights. In fact, with solutions for both digital rights management and information rights management (through its Rights Management Services solution), Microsoft sees the need to protect such rights through technical measures as a potentially lucrative business opportunity. It should come as no surprise then that it would rather not see powerful companies like Google nudging the global culture away from a default of "you must respect my copyright until I say otherwise."

Forgetting whether the company is right or wrong or whether it even has the moral authority to eviscerate Google for its copyright policies, in one fell swoop, the question Microsoft Associate General Counsel Thomas Rubin raised when he raised it (in front of the Association of American Publishers), drew the entire book industry onto the same analog/digital battlefield that the TV, movie, and record industries were already sharing. Not that it wasn't there already thanks to a lawsuit brought against Google by the AAP in 2005. It's just that now, the AAP has Microsoft in its court: a company with a proclivity for unleashing its legal eagles on causes (eg: spam) that peripherally impact its customers.

My sense is that we have not yet heard the last of Thomas Rubin. While the timing of Rubin's comments with the other two aforementioned copyright blockbusters may be purely coincidental, the fact remains that Microsoft's stepping into the ring has indelibly raised the debate to a level that can no longer be archived as just another a news headline. It's out of the closet like it never was before and now, in the struggle between the old and new, reconciliation will not be pretty given the interests and warchests involved.

The aforementioned and recently implemented CRB decision probably did not get the attention deserved given the impact it will have. Quite honestly, it completely escaped my radar until a reader wrote to me yesterday to say that the issue merited more coverage than it received. A quick Google search turned up a story written in part by friend, former ZDNet editor and music industry insider Susan Butler (now at Billboard Magazine). It wasn't until I called Butler that I grasped the magnitude of the new rules under which peformance copyrights will be universally administered.

When it comes to playing music the way a radio station plays music (and broadcasts it over the air), there are actually two sets of copyrights that come into play; one for composition, the other for performance. It sounds complicated but it actually makes sense. For example, take Ray Roy Orbison's Pretty Woman which was later covered by the rock band Van Halen.  No matter whose peformance of Pretty Woman is being played, the composition copyrights accrue to Ray Roy Orbison. But the performance copyrights accrue to the performers. I've left out some of the details, but those are the fundamentals. It's also why, at the end of the previous paragraph, I've emphasized performance

Prior to 2007, performance copyright holders were required to grant a license to anyone that was Webcasting or simulcasting the non-interactive digital performance of a sound recording. Non-interactive refers to the inability of the consumer to select specific sound recordings for playback. Included in the royalty structure of this compulsory license were provisos for classes of Webcasters and simulcasters that were non-commercial or simply couldn't afford the sorts of fees that a highly profitable venture could. Instead of a per performance cost, certain organizations could instead pay a percentage of their revenues or expenses. Tracking who paid what and under what terms was non-problematic since all such royalty transactions for the entire recording industry are handled through one intermediary: SoundExchange

But, as a part of a decision that was handed down two years ago, the first quarter of 2007 brought with it the elimination of those low end provisos. Now, it doesn't matter what type of organization you are; the low end, pay-one-price bundle which was good for independent Webcasters, college radio stations and outfits like NPR no longer exists. The decision to essentially level the playing field isn't completely irrational and in fact, is another incredibly potent manifestation of the analog/digital struggle.

While the efficacy of low-cost royalty programs is undeniable (and desired), there also exists another problem. With almost no barrier to simulcasting its signal worldwide on the Internet, a college radio station (whose radio signal barely reached the edge of a campus) is now a credible threat to commercial outfits. Not just in their geographic area either. There have been plenty of times where I've found an Internet broadcast devoted to acoustical mixes that I simply can't find locally. The result? The local stations lose my listenership. What's good for the goose is good for the gander, right? If that college radio station in Lansing, MI can broadcast to NYC, WNEW in NYC can return the favor and broadcast to Lansing, right? The playing field appears level until you realize the Lansing-based college station is operating on a cost structure that makes WNEW's business unfeasible.

Something had to give. It did. And now, unless the decision is revisited (my hunch is that it will be), small time operators as well as non-commercial ventures will either have to buck up or bow out.  Here is yet another example of how in 2007Q1, the pain of the digital revolution is being laid bare for all of us to see and, in some cases, personally experience.

Then, along comes Viacom and once again, the almighty copyright is coming home to roost right in the middle of the battlefield. One billion dollars. Do you think that's a lot for a copyright suit? Think again. Not only did Stephen Slesigner Inc., the copyright holder to the Winnie-the-Pooh brand, recently thwart Disney's attempt to terminate its royalty obligations relating to Pooh brand licensing, it is launching its own $2.5 billion dollar lawsuit against Disney. According to the School Library Journal:

Disney and Slesinger have been locked in a nearly two decade battle over those rights, with Slesinger claiming that Disney owes millions of dollars in licensing fees on profits made from DVDs, video games and other electronic items featuring Pooh, Tigger, and other Pooh characters.

If Schlesinger v. Disney has the slightest tinge of the digital evolution that's afoot, Viacom v. Google reeks of it. Viacom referred to the existence of its copyrighted content on Google's YouTube as "massive intentional copyright infringement." Intentional? That of course makes it sound like Google itself is pirating Viacom's content onto the YouTube network. It's not. But it may not matter since what Viacom is really saying is that Google knows it's there and isn't doing enough to get rid of it. Meanwhile, Viacom claims, Google is making money (through advertising) on content it hasn't legally licensed. Ironically, Viacom doesn't have to dig through missing emails (the way AMD is trying to do with Intel's) to size up the losses. Right there, in YouTube's user interface for each video, it clearly states how many times the video has been viewed. According to CNET News.com's Anne Broache:

The complaint filed in the U.S. District Court for the Southern District of New York contends that nearly 160,000 unauthorized clips of Viacom's entertainment programming have been available on YouTube and that these clips had been viewed more than 1.5 billion times.

That Viacom is seeking approximately $1 billion in damages actually doesn't seem like a bad deal for Google. That's less than $1 per viewing (far cheaper than the $4 that Amazon's Unbox service charges TiVo users for only 24 hours of access to a video).  

Whether Google should pay or will pay however doesn't speak to the culture clash before us. If it's not YouTube, it will be TheOtherTube.com (FYI: according to the WHOIS database, that domain is available) where ordinary people will be pirating copyrighted content. And Viacom is not alone. In fact, if you go to YouTube, you'll find that ordinary people are making illegal copies of ZDNet's videos including one featuring me talking about digital rights management.

On YouTube, that video has been viewed more than 9700 times. When we at CNET first saw this, we weren't quite sure what to do about it. Call Google? Attempt to track down the user who posted it? For now. None of the above. Instead, our first response is to leverage the opportunity. For example, today, there are no pointers (often called "slates") in our videos that say something like "For more great ZDNet video, go to videos.zdnet.com." In other words, we missed 9700 opportunities to invite new users -- users who collectively appeared to like the video since they gave it a four-star rating -- to ZDNet. Long-term, is that a viable model? Could we continue to produce our videos against the backdrop of massive piracy (on the order of what Viacom has endured)? Or what if the pirates edited out our slates or any other commercial messaging (easily done)? While we don't have the answers yet, Viacom apparently does. Of course, with no print or broadcast legacy, we represent the new culture. Them? Old.

Right in front of you. Right now. The copyrights have come home to roost and it's casualty-time.

Topic: Legal

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137 comments
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  • I liked this article so much...

    I bought the domain! (theothertube.com)
    jymbolia
    • Congrats... but what about vTube, yTube and lest we forget... X-Tube

      A domain name is one thing.... doing something with it is yet another :-)
      Ozzzzz
  • Excellent reporting!

    Thanks David,

    this is the sort of in-depth article that ZDNet needs - factual, up-to-date, informative and entertaining. Too often lately others have posted rehashed old non-news.

    Great, keep it up!
    javarunner
  • Those 160,000 files

    People keep failing to notice that Viacom hasn't actually checked out those 160,000 files, they just suspect they may contain copyrighted content from their titles and such. Many are not owned by Viacom at all. Kind of like the RIAA suing someone for distributing a file with the same name as a Madonna song, when the file is not that song.

    Great article though. We're on the brink of a new era in copyright. Either our culture gets locked down in the name of profits, or opened up in the name of technology and progress. Personally, I think that no matter what the courts decide, the latter will happen, with or without the blessing of the law. Time for some new business models, rather than lawsuits.
    tic swayback
    • Absolutely! What We Need is a New Business Model

      VIACOM sees YouTube/Googles theft of its intelletual property as a problem; and in the American way, is resorting to the courts for a solution.

      Other might see 160,000 instances of their material gathered up and published completely free of cost as an opportunity.

      Surely Google needs to licence access by undertaking to play ads related to the interests of the copyright owners whenever a "pirated" clip is played?

      In this way whenever a viewer selected a VIACOM clip they would automatically see an ad promoting something VIACOM wanted promoted or were being paid to promote. And the same for the BBC, or SKY or whatever.

      Honour satisfied and we're all doing business.
      brian.smith@...
      • Honour, nothing.

        What Viacom wants to do is make money from its content. Nothing the matter with that. Viacom wants to set rules for the use of its content in order to be able to follow its business plan.

        If that plan is sensible - intended to encourage access profitably for Viacom and satisfactorily for users, then the system is working as required for business to be conducted. Ads are one way for Viacom to obtain value, but not the only way.

        Both Viacom and users can act unsensibly. But the satisfaction of both will not depend upon honour.
        Anton Philidor
      • New buisnesses start all the time

        As a parallel I recently was offered a job as a stock broker. Thinking it was odd because I had no training I asked around. It seems that with the advent of computer trading the old stock broker who got rich off of the ridiculous margins between actual sale price of a stock and what you paid for it had been shown the boot. To make money now a stock broker needs about 40 million in accounts and then must manage those accounts for an increasingly savvy consumer. Usually a broker today is investing for long term goals such as retirement rather than trying to sell you a pet stock that is suppose to go through the roof tomorrow.
        Music and video entertainment will probably have to make a similar adjustment to meet the demands of the new digital age. I for one won't be sad when a pop star, movie star, and or executive makes less money while doing more work.
        dendari
    • It's like Pandora's box ...

      ... once opened, there is no closing it again! All there is is learning to live with it!
      M Wagner
      • Better than that

        I'd say there are much better opportunities than "learning to live with it." I'd say it opens up new opportunities. Case in point, the VCR comes out and the movie studios sue, trying to get it banned as an illegal technology. After this fails, they eventually alter their business model. Now the studios make more money from video sales and rentals than they do from ticket sales.

        That's what will happen here, eventually.
        tic swayback
        • Not neccessarily

          You are assuming that the courts will uphold what you refer to as opening up the market. There is no indication from past cases that this is what is going to happen. They have sided with the copyright holders in almost every challenge.

          What is at issue is whether YouTube is liable for subscribers' illegal use of copyrighted material. What the case will likely hang on is whether YouTube did perform due diligence in removing clips when they were brought to their attention. That is what the law requires, as I understand it.

          What is not at issue is that we, the users, continue to ignore the fact that this material belongs to someone. Someone IS making money from their hard work, and it doesn't matter a twit if that is a huge corporate entity such as Viacom or a beginner in the music business such as the myriad bands we find on MySpace. Does it make sense for companies like Viacom to look at YouTube exposure as free marketing? Well maybe. I tend to agree. But I am not a copyright holder of currently-hot digital property (I would love to be in that position). What happens when last night's Larry King Live shows up just as CNN is trying to charge its rightful subscription dollars for that performance? Or when Spielberg's latest epic appears on a dozing BitTorrent sites the day BEFORE it opens? Especially since any sequels and future rights depend entirely on the box office performance of this film.

          In Viacom's model, they own huge stores of syndicated programming - programming unavailable from any other source, but that has less per-view value than, say, the latest Britney video (oh, wait...). OK, make that the latest George Clooney movie. In short, they make it up in volume. It isn't free marketing when the per-view value is lost on free viewing. Even the utility of the suggestion in the article is lost - no one will go to Viacom's website to find more videos if they can get them for free on YouTube.

          I am both a creator and a user of digital content. I perform, and I engineer. I have a vested interest in seeing authors and copyright holders get the royalties they deserve. The truth is, if you want the quality of production you are getting today (please, no assaults on the dearth of said quality - I am making no judgements here), you have to be willing to pay for it. If you don't, what you see for the most part on YouTube, the guys falling off the rails on their skateboards to poorly recorded heavy metal soundtracks (also likely illegally recorded) is ALL you will see.

          This isn't to say that I am against fair-use provisions for those works. I am very disturbed by the current use of DRM mechanisms to keep me from exercising my legal rights regarding material I have legally purchased. But part of the reason we are getting these lawsuits is that we, the users have totally abused those rights. In my opinion, all we are doing is justifying the police-state tactics of the RIAA. I hate the thought, but I fear that the place that copyright law will finally roost is on top of us.
          always-a-geek
          • My point exactly

            As I've said elsewhere, I don't think it really matters what the court rules here (at least not to Joe Average). Just like during Prohibition, people are going to do what they want to do. If you ban sites like YouTube, people will find a work-around and get the same content in another way.

            The idea is instead of trying to eradicate the technology, try to find a way to profit from it (the obvious example being the MPAA trying to ban the VCR, and then figuring out how to make more money from video sales than from ticket sales).

            As someone who has created copyrighted material for sale, and as someone in the publishing industry, I do share your worries about creators getting their just rewards for their work. But times change, and perhaps creators will need to find new ways to exploit their creativity. Look at a band like The Barenaked Ladies, who are experimenting with all sorts of new business models:
            http://www.wired.com/wired/archive/14.09/nettwerk_pr.html

            You can't sit still and expect to keep the money rolling in. You need to move with the times, adapt as technology changes.
            tic swayback
    • Inevitable victory.

      Because an economy which deemphasizes manufacturing must be based on obtaining money for ideas and their management, the result of all these issues can only and inevitably be a win for copyright and other restrictions.

      Sounds grandiose, but the prosperity of the country to a greater and greater degree relies on material being "locked down in the name of profits".
      Anton Philidor
      • What if no one will buy?

        ---Sounds grandiose, but the prosperity of the country to a greater and greater degree relies on material being "locked down in the name of profits".---

        Sorry, can't agree. If you make a product unusable, no one will buy it. That doesn't help the prosperity of a country.

        Just like Prohibition, people are going to do what they want to do. They'll find ways around those locks.
        tic swayback
        • Business model

          People prevented from obtaining what they want will find a way past the locks.

          Better locks used for passing through rivers and lakes, even oceans, in which passage is available and the service is worth the cost.

          The content companies were irrationally hostile to a new distribution method, refusing to accept the profits that were waiting for them. The goal of profit does not prevent flexibility; for the sensible, the response to opportunity is more, not less profit.
          Anton Philidor
          • People prevented from making money...

            ...from their content will be unable to raise the capital to make more. Music can survive on low-cost bands, there is so much fat in the system still, but movie studios take huge financial risks on every title. If they dont pay off, investors will go elsewhere.

            Financial reality is that if every big budget movie gets pirated to the point it can't pay a return, there wont be any big budget movies left to pirate.
            A.Sinic
          • Numbers don't bear this out

            ---Financial reality is that if every big budget movie gets pirated to the point it can't pay a return, there wont be any big budget movies left to pirate.---

            Odd though--this year's box office was huge. And there were massive increases in the countries where piracy is most rampant (China, India, etc). Perhaps the relationship between piracy and profits is not as straightforward as you think.
            tic swayback
          • But that isn't real

            The reason this happens is that, for today, the technology for viewing a movie at home AT THE QUALITY OF THE THEATER is expensive, if it is even possible. Even if you suggest that most viewers are not sophisticated enough to care that much, even home theater systems of sufficient quality are too costly. No one wants to see "The 300" on a 15" laptop screen.

            But this is changing rapidly. 1080p LCD's are expected to be at January's 720p prices by June. As more and more people get higher speed access (I have fiber optics to the house right now, and I get 5 gigs per second - and I am not even buying the premium service), file sizes can go up, and resolution gets better. The performance gap will disappear in less time than you think. And by then the battle will already be over.

            Sorry. This is not an argument for revoking the copyright law. It could be an argument for reevaluating one's marketing plan. But it will only be a good decision if it is cheaper than fighting the infringement legally. And I don't think that is likely.
            always-a-geek
          • How is it "not real"?

            As piracy has increased, so has box office, particularly in areas where piracy is most rampant. Blame it on a lack of fancy tv's if you'd like, but facts are facts. Apparently piracy is driving ticket sales.
            tic swayback
          • Better locks don't last long

            Well, we've seen how long new locks last in the digital age. Perhaps a week at best, usually just hours. Quite an investment in trying to maintain the past, rather than moving forward into the future.

            ---The goal of profit does not prevent flexibility; for the sensible, the response to opportunity is more, not less profit.---

            Nail hit on head. The new technologies are a golden opportunity, and companies should be rushing to take advantage of them, not trying to get them banned.
            tic swayback
    • A business model based on theft?

      Naw, I don't think so...
      No_Ax_to_Grind