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.