ZeroPaid.com

ACTA Officially Headed to the European Court of Justice

Drew Wilson — Tue, 15 May 2012 19:17:11 +0000

Is ACTA a violation of European human rights? That's what the European Commission hopes to find out. The controversial agreement has been referred to the European Court of Justice.

Negotiated behind closed doors. Very few stakeholders involved or even allowed to hear the negotiations. Considered to be one of the greatest threats to the Internet today. ACTA has been one of the most controversial agreements around. The only reason we've even heard about it in the first place was because the text of the draft document was leaked by Wikileaks. While the original drafts contained a global three strikes provision, one of the more recent versions has had that removed. Still, it is a major threat to innovation and Internet because of it exporting the more controversial provisions of the DMCA to the rest of the world and even goes beyond US case law. Serious questions are being raised like whether or not this agreement, if implemented, is violation of human rights and, as is the case here, could ever be properly implemented in European law. ZDNet is reporting that these matters will now be looked at in court:

The Commission said in February that it intended to make the referral, to see whether ACTA was in line with fundamental rights. However, the European Parliament, which is set to vote on ACTA's ratification in June, has refused to delay that vote to wait for the ECJ's opinion. There is a great amount of hostility towards ACTA within the Parliament, and digital agenda commissioner Neelie Kroes has already admitted that ratification is likely to be rejected. If that happens, the copyright enforcement treaty cannot come into force anywhere in the EU. Kroes, however, is not the commissioner in charge of handling what is nominally a trade agreement. In a statement on Friday, the spokesman of trade commissioner Karel De Gucht said the referral had gone ahead, asking the ECJ: "Is the envisaged Anti-Counterfeiting Trade Agreement (ACTA) compatible with the treaties and in particular with the Charter of Fundamental Rights of the European Union?" "The Court's opinion is vital to respond to the wide-ranging concerns voiced by people across Europe on whether ACTA harms our fundamental rights in any way," John Clancy said. "The European Commission has a responsibility to provide members of the European Parliament and the public at large with the most detailed and accurate information available."

The decision to implement ACTA ultimately rests on the European Parliament. The question is, would it ever be ratified? The speculation is that it won't. From The Guardian last week:

Speaking on Friday, Kroes said that "we are now likely to be in a world without Sopa" – the US's proposed Stop Online Piracy Act – "and Acta." [...] Ryan Heath, a spokesman for Kroes's office, said the European commission has not changed its position on the usefulness of Acta, and was continuing to work toward its ultimate ratification, but added that Kroes was "observing political reality". Kroes's comments come weeks before the commission, the EU executive, is due to make public new rules to ensure that musicians and film-makers get paid, and while it is trying to overhaul the bloc's copyright regime to cater for the internet era. Critics say the commission is holding back planned reviews of the EU's own rules because officials are worried it will come up against the same kind of resistance as Sopa and Acta. "After the tremendous mobilisation of citizens around the world against Sopa and Acta, it would be extremely dangerous politically for the commission to propose a new repressive scheme," said Jeremie Zimmermann, from internet advocacy group La Quadrature du Net.

According to La Quadrature du Net, there has already been a draft report saying that ACTA is contrary to basic democratic rights:

Today, on May 8th, the rapporteur Dimitrios Droutsas presented his draft report to the LIBE committtee, highlihtening that ACTA was a threat to fundamental freedom and would freeze any attempt to democratically debate copyright policy in the EU. As many LIBE members underlined the lack of a clear call for rejection of ACTA, he agreed to add to his report language stressing that ACTA is not compatible with the Charter of Fundamental Rights of the European Union, thus clarifying his position. “Mr. Droutsas' draft report is a very important acknowledgement that the EU has a role to play to protect and promote human rights internally and on the international stage, and that ACTA runs counter to this duty. The document also rightly underlines the need to open a broad debat on the future of copyright and overcome the dangerous antagonism between today's current regime and the new social practices that are flourishing online, such as culture sharing.” said Philippe Aigrain, co-founder of the citizen advocacy group La Quadrature du Net. “After the EU privacy watchdog's opinion slamming ACTA, this draft report is yet another blow to the EU Commission and other copyright extremists within the Parliament, who have been relentlessly pushing for ACTA. The committee on civil liberties must approve Mr. Droutsas' report, recommending the Parliament to reject ACTA and making clear that a broad and open-ended debate on the future of copyright is needed.” said Jérémie Zimmermann, spokesperson of La Quadrature du Net.

With all indications saying, basically, that ACTA is dead in the European Union, it will be interesting to see if this is re-confirmed by the European Court of Justice. I think that if the court rejects this and the European Union refuses to ratify it, this could also jeopardize the chances of countries passing other, more draconian copyright agreements such as the Trans-Pacific Partnership (TPP), which we've discussed recently, because an international standard has been set saying that these agreements are a contradiction to the basic principles of democracy. After all, I never understood how criminal laws could be discussed and negotiated in secret between a small one-sided set of stakeholders, brought to various countries and expect the countries to just rubber stamp those laws. Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

What Filesharing Studies Really Say – Part 14 – File-Sharing Litigation Never Worked In Asia Either

Drew Wilson — Tue, 15 May 2012 14:00:56 +0000

In the previous study we covered here on ZeroPaid, we saw an interesting point that lowering prices is, perhaps, the best way to attract customers as noted in Korea. That study wasn't the only one conducted in that region. In this study, there is a the familiar argument that file-sharing lawsuits don't really work. This time, the focus is on Korea and Japan.

We've now arrived at the home stretch of our series - now having reviewed three quarters of the studies we were able to retrieve from scholarly sources and it has been quite a journey. The study for today bears the title "A Legal and Cultural Comparison of File-Sharing Disputes in Japan and the Republic of Korea and Implications for Future Cyber-Regulation". This study was published in 2008 by the Colombian Journal of Asian Law. The study begins with a review of what some of the legal actions major entertainment corporations have taken. Some of the actions include the lawsuit against File Rogue, the conviction of the programmer of file-sharing software Winny, the legal action against providers of Soribada (referred to, in this study, as the Korean equivalent of Napster) and the litigation of a number of file-sharers as well. What was interesting at the beginning of this rather lengthy study was some of the legal changes of copyright law and their impact on file-sharing:

Notably, it has been legal provisions generally disfavored by the entertainment industry, such as permitting CD rentals, and not stronger punitive measures against file-sharers, that have lessened the impact of file-sharing on Japanese copyright owners. For Korea, where file-sharing has been and remains common and economically significant, a broader consideration of the cultural environment is necessary. While cultural issues are at play in explaining the consistent pervasiveness of filesharing even in the face of criminal sanctions, the operative factors are not traditional Confuicianist notions, as are often invoked to explain social attitudes in East Asia."

To my knowledge, I think that when it comes to stopping file-sharing, I'm not convinced the idea of renting music CD's entered the minds of many people in North America. Even if the idea of renting out CDs was floated, I'm not aware of it being used as a deterrent to file-sharing - unless of course I've missed something somewhere along the line. I suppose, in spirit, North America and Europe have a similar idea with music streaming sites. Overall, an interesting connection that didn't necessarily enter my mind before. The study then covers some background in copyright law in Japan starting with the Meiji Restoration of 1868. Further down, it also reviewed the 1869 Publishing Ordinance, the introduction in 1875 of a "monopoly right" (which is a 30 year copyright term), and the amendment of the Copyright Act in 1899 to list a few examples of a rather lengthy historical review. What is also noticeable was that copyright laws, according to the study, wasn't really stringently enforced until the 1950's and 1960's which is after World War II. Copyright law was extended to 50 years in 1971. Korea had a similarly extensive review of it's copyright legal past as well. What may be of interest for those who are more followers of copyright then file-sharing might be the following comment in this study:

Japan has no statutory provisions on indirect copyright infringement. Under Japanese law, only direct infringement can form the basis for injunctive relief

What is also of interest is copyright exceptions as it relates to file-sharing:

The Japanese Act contains a broad private use copying exemption, but this exemption has not been interpreted to apply to filesharers, at least not to file-sharers who upload works. While downloading a copy of a work for private use would likely fall under the exemption, downloading to a shared folder would permit other users of the particular file-sharing software to copy and thus constitute infringement.

While this can change at any time, Canada sort of operates in a similar fashion that uploading isn't necessarily illegal, but the act of downloading is considered by a number of law experts to fall in to a legal grey zone and is interpreted as legal for now. Of course, enforcing copyright laws on downloaders has been pretty absent in the world of copyright litigation. Most, if not, all, file-sharing lawsuits to my knowledge have been directed at uploaders. So, while laws vary, the actual practice of copyright enforcement has generally been directed at uploaders and website operators in a number of countries to my knowledge. What is quite interesting is the comments of Korean file-sharers:

Civil suits against individual users of file-sharing software are legally available where infringements occur, but no such suits have yet been attempted. Criminal prosecutions may also be taken against direct copyright infringers. Thus far, approximately 30 Koreans have been prosecuted for infringements resulting from file-sharing (including both uploading and downloading).

This, I have to admit, is the first time I've heard of file-sharers getting targeted for the act of downloading which probably speaks to the rarity of such a thing of ever happening. Still, it's not entirely clear from this excerpt if any of those 30 individuals were prosecuted for the mere act of downloading and not uploading. If any of them did get prosecuted solely for downloading, then it's the first I've heard of anyone ever getting prosecuted for downloading. The study then goes on to discuss the architecture of file-sharing in File Rogue and Soribada. It also mentions that eDonkey and Pruna were also popular in Korea. The study also discusses various legal actions and the development of p2p over time since File Rogue. One note of interest is that "To date, there have been no civil lawsuits brought against individual file-sharers in Japan". It noted that, generally, commercial copyright piracy is what gets prosecuted in Japan and that there were 13,000 complaints issued against alleged infringers, but the Prosecutors Office said that they'd only go after commercial infringers. The study further comments that file-sharing attitudes are, well, not too dissimilar to that of North American file-sharers in roughly the same time period - that many of them didn't really see much harm in the activity. What is also an interesting similarity is that while there was a noted decline in physical music sales around the same time period file-sharing was widely available, "there is not a clearly documented causal relationship between file-sharing activities and a decrease in music sales. Amongst other alternative explanations, some of the CD sales have likely been replaced by other legal means of obtaining music, such as fee-based downloading." This is even though the major record industry insists that file-sharing is killing the music business. Moreover, the following portion seems to agree with the previous study about how price could be the best weapon against file-sharing:

For consumers in nations without available music rentals, filesharing presented an opportunity to obtain music without paying the price of a CD. CDs cost the equivalent of at least US$30 in Japan, while Korean CDs are priced in a range similar to CDs in the U.S.' When asked, Korean file-sharers frequently cite the price of music CDs as a motivation for file-sharing.'

This seems quite consistent with previous studies on why file-sharers tend to download from unauthorized sources. The thing about all of this is that there are two factors working against younger people when it comes to buying music - higher tuition fees and lower wages. This is especially true today when it seems that tuition fees are sky-high and the only direction they are going is even higher. Meanwhile, younger people are continually being expected to work for less. In some places, it is legal for the youngest of the population to be paid below minimum wage in a traditional work place. When you factor in the expectation of the cost of maintaining a car (with gas prices headed in the same direction as tuition fees), rent (which is sky-high in places like Toronto, Edmonton and Vancouver to name a few places) and owning a cell phone (with data plans that have been known to be about as asinine as tuition fees at times), how much money does that leave for buying music in the first place? When people are expected to work for less and pay more for the same services they want, something is going to give sooner or later. Skimming ahead a little, there was this other interesting note about the philosophy of Confucius as it relates to file-sharing and music:

Many in academia, journalism, and government have suggested that the nature of the tension between Korean society and its current copyright law is fundamentally philosophical. They argue that Koreans traditionally regarded artistic works as public goods, not private property, and the creation of such artistic works need not be incentivized through an American-style copyright regime. ' Traditional Confucian ideals that elevate scholarship above the level of mere economic transaction and emphasize collective social benefit may help to explain a cultural nonacceptance of western copyright doctrine. ' Though the Korean Government has gone to some lengths, at the behest of the U.S., to educate Koreans on the new copyright regime,'" it seems that familiarity with Western copyright principles has not led to those principles being widely embraced in Korea.'

I think it's not just Confucius philosophy that leads to skepticism about American style copyright law. In a number of countries, there is skepticism about American style copyright laws. for a whole host of reasons. One of the biggest reasons why people in some countries are skeptical about American style copyright law is that it's being forced into the country through heavy-handed techniques. One excellent example is through trade agreements like ACTA and the TPP. Both have had a long history of being negotiated in private, then, at the end of the day, numerous countries are being expected to just implement laws recommended in these agreements. This completely circumvents basic democratic principles of laws being debated publicly before passing them in the first place. It's like a secret government is dictating what laws should and shouldn't be passed on other countries. It can easily be seen as an infringement on the basic principle of sovereignty. Sovereignty was another underlying current in the original raiding of ThePiratBay. American officials basically told Swedish officials to seize the servers of the BitTorrent website in a manner that contradicted Swedish law. I think the idea of America putting its nose in another countries business and doing what it pleases in another country has a tendency to fuel skepticism towards American style copyright when it's also being pushed onto people in Sweden. There was also the great push to put a three-strikes law in New Zealand which fueled debate on why America was writing New Zealand law. I really could go on and on why there is skepticism of American-style copyright laws. Another interesting note:

Of the Korean students surveyed, almost all file-shared copyrighted works, and few considered it to be wrongful. However, many stated they thought it was wrong to purchase pirated physical copies, and they said they would not purchase such copies even though they were not deterred from doing so by fear of punishment.

I think something like this is also seemingly universally shared thinking. I think it's easy to start traveling over moral boundaries when we start talking about buying bootlegged content. When it's non-commercial, it isn't seen such a bad thing compared to buying bootlegged material for a large segment of the global population. To me, if you're willing to pay money to buy music, buy it from an authorized source for crying out loud. In an interesting twist, the study then talks about how file-sharing is seen as a way for Korean's to express their views and freely access legally posted material online. The study cited a few Korean's in a survey saying that they use file-sharing to access freely posted materials which also includes open source content. While the study discussed, at length, how news not covered by traditional media is posted online, the study made an interesting connection between the two:

Has this discussion gone too far afield of the subject of filesharing regulations? The connections between file-sharing and internet political activities are indirect and often speculative. However, if a society sees file-sharing regulation in the context of socially and politically relevant internet freedoms, it is likely to take a less restrictive approach to regulation than a society that does not. There are plausible reasons to think that Korea is more the former, and Japan more the latter.

Towards the end of the study, there is this comment:

In both Japan and Korea, as in many other nations, increasing attention is being devoted to the possibility of finding private industry solutions to problems that traditional copyright law has been unable to fully control. In general, the Korean music industry has been very aggressive about adopting fee-based internet downloads as a new channel of distribution, and the industry can be expected to continue to innovate in the face of widespread file-sharing amongst young Koreans. Other major industries based around works that are easily file-shared, such as the movie industry, can also be expected to explore new means of marketing and distributing products. In Japan, the music industry has been relatively slow to adjust to internet-based business models, but it has the luxury of slow adaptation because profits have remained relatively stable in recent years. I have argued that Japanese profit margins have in part been preserved by pre-existing legislative bargains by which the Japanese state has balanced economic interests with the desire of the public to utilize new technologies. This fundamentally different approach, driven by public discourse and compromise, will likely remain an essential component to Japanese regulation in the future.

The comparison is quite interesting. As profits slid in Korea, the music industry began to adapt. Meanwhile, in Japan, profits have been stable, so the industry felt no real need to adapt quite as quickly to technology. In North America, as profits slid, there was an increase in efforts to not adapt to technology for the music industry. So, in the US, the opposite was seemingly strangely true. I don't know about everyone else, but the context of the music industries reaction to file-sharing in both Korea and Japan and then adding the context of the music industry in North America makes the North American music industry rather strange. Since this article is long enough, we'll skip to the conclusion of this study:

This article has shown that legal enforcement, whether criminal prosecution or civil suits, is unlikely to curb file-sharing and protect traditional content-based business models in Japan and Korea. In the Japanese case, relatively low rates of file-sharing stem from legislative compromises that, intentionally or not, have mitigated the incentives for users to file-share and the impact of file-sharing on industry revenues. In particular, the music rental industry altered the relationship between filesharing and industry economics and has blunted the impact of filesharing. [...] In Korea, file-sharing has remained widespread in spite of legal action taken against both service providers and individual users. With no immediate punitive threat present against noncommercial file-sharers, there is little reason to expect file-sharing to become less prominent. The high frequency of Korean infringement of copyrights online may result in part from Korea's historical experience with copyright law, as well as the particular value of a free internet to Korean social expression and political activities and identity. Forced to react to unfavorable business circumstances, the Korean music industry has adapted by rapidly expanding legal online distribution of copyrighted content. Inasmuch as file-sharing continues despite convenient and economical legal alternatives, however, the Korean music industry may have to adjust to significantly reduced revenue streams or to consider more drastic business reforms to induce voluntary consumer participation in industry business models. One already lucrative market segment that could be expanded is easy and rapid distribution to mobile devices.

One theme that stuck out for me was the idea of adapting business models to technology. Another theme was the fact that litigation and enforcement never really worked to stem file-sharing. Overall, I found this study to be informative given that it's often difficult to know what is happening in places like Japan and South Korea with respect to file-sharing. Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

MPAA Calls Censorship ‘Good News’ for Consumers

Drew Wilson — Tue, 15 May 2012 14:00:02 +0000

We've been following the dramatic censorship news from Europe as of the last few weeks. So has the MPAA (Motion Picture Association of America). In a blog posting, the MPAA celebrated the recent developments in Internet censorship as "good news" for consumers.

It's been quite a month in censorship so far and the drama has yet to let up. At the end of last month, the UK high court ruled that ISPs must block Swedish BitTorrent website ThePirateBay. Barely two weeks later, reports surfaced that critics of internet censorship, among others who shouldn't have been a target, found their own websites on ISP filtering blacklists. While the mere combination of the two stories should serve as a stinging indictment for supporters of censorship, the MPAA was busy applauding moves to censor the internet. The MPAA titled their comments on the Netherlands with "More Good News for Creative Community and Consumers Coming from the Netherlands" The MPAA post commented on how all ISPs in the Netherlands must block ThePirateBay. In addition, the post contains the following comments:

In a second legal case against the Dutch Pirate Party, the District Court of The Hague found the Dutch Pirate Party responsible of facilitating active circumvention of The Pirate Bay block and ordered it to stop offering services that allowed continued access to The Pirate Bay. The court states that this does not infringe upon free speech or the possibility of the Dutch Pirate Party to take part in the political discourse.

For those who are less familiar with this, after a court ruling that says that all ISPs in the Netherlands must block ThePirateBay, the Dutch arm of the Pirate Party set up proxies much like the UK pirate party to circumvent the censoring of the website. In response, the political party was taken to court and ordered to cease their anti-censorship tactics and remove all links to proxies. The Pirate Party of the Netherlands posted details of what happened including the following:

Specific Proxy stays censored As mentioned, the ex parte injunction stands. That means our specific proxy hosted on tpb.piratenpartij.nl has to stay censored. We are also prohibited from placing any lists or links pointing to other ways of circumventing the block. Generic proxy has to be censored This is a slap in the face for the free internet and a novel judical decision. The judge decided to give the Netherlands another nudge on the sliding scale of censorship. More and more bits of the internet will have to be censored because they might be used to get access to ‘ infringing’ sites, until eventually most of the internet will be unreachable. Unclear parts. In point ii) of the verdict the Pirate Party is ordered ‘to cease & desist presenting direct links to other TPB dedicated proxies.’ This prohibition seems to cover the whole *.piratenpartij.nl domain. We have to comb every inch of our site, including our blog, to make sure we have no links to sites such as geenstijl.nl (Dutch news weblog) or rechtspraak.nl (Dutch law weblog). If we would want to try and risk €10.000, we could try and see what exactly is meant by ‘direct links’. Point v) bids the Pirate Party ‘to cease & desist placing lists with internet addresses which can be used to circumvent the block of TPB, on her subdomain tpb.piratenpartij.nl.’ Apparently it is now forbidden to direct people to the Tor project’s download page, or even the Opera browser’s page.

In other words, it appears to be illegal to link to TOR project or pretty much everything contained within this article in the Netherlands. As we've noted above (and what many others have noted) this is a dangerous slippery slope that could ultimately be open for abuse in the future. Trying to criminalize linking to tools that help to ensure free speech is an extremely dangerous game to play. These corporate entities are really playing with fire at this point because they are now pushing the Internet to develop something that is completely out of the corporate powers control. There are already onion websites in existence as well as darknets which are no doubt being constructed in response to all of this. I personally hardly consider any of this good news for consumers. Is potentially splintering the internet thanks to ISP level filtering good news for consumers? Is disconnecting random individuals based on the flimsiest of accusations of copyright infringement thanks to a three strikes law good news for consumers? Is blocking random websites in the hopes of stopping copyright infringement all the while blocking political dissent, activists and small businesses good news for consumers? I don't think so. These rounds of censorship is bad news for everyone and if it isn't apparent now, just wait until these corporate entities start blocking website's en-mass as that is no doubt what will be next. (Hat Tip) Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

UK ISP Filters Blocking Legal, Non-Infringing Activists Websites

Drew Wilson — Mon, 14 May 2012 23:53:47 +0000

One of our main criticisms about online censorship is that, most of the time, there's little to no accountability and that such regimes open the door for abuse. A new report coming from Open Rights Group highlights exactly why we are against it just weeks after UK mobile ISPs began blocking Swedish BitTorrent Website ThePirateBay.

It's almost tragic just how perfectly our concerns about internet censorship are being practiced - and even more so thanks to the timing of it all. Late last month, the UK High Court ordered ISPs to begin blocking Swedish BitTorrent website ThePirateBay. At the time, this was part of our response:

The article doesn’t necessarily elaborate on the slippery slope mentioned here, but we too can see a very dangerous slippery slope as a result of this ruling. Even if one did support the blocking of ThePirateBay, the question then becomes where do we draw the line? Does this allow major corporations merely to block the most, what they call, “notorious” websites? What about smaller sites or private sites? Are blogs and discussion forums also possibly subject to blocking? What sites that allow open discussions period? Will it eventually get to the point where even discussing copyright becomes grounds for possible blocking from the ISPs? What about websites that just allow artists to post their own music? If it’s possible to upload a remix that might not have gotten copyright clearance, do those websites face blocking as well? What about proxies and content that can be used to circumvent such blocking? Sure, this recent blocking is only directed at one specific website, but it’s very easy to see the kind of floodgate being opened where mass censorship of the internet becomes the norm.

While this latest report is more directed at ISP filtering software designed to block pornographic material, it is still a form of censorship nevertheless that is classified as over-blocking. You can read the report yourself here. (PDF) The report found 60 websites unfairly blocked. Among those are the following top ten websites that clearly show an example of over-blocking. From the report:

Following these reports, we wanted to understand the scale of the over-blocking problem. To help do this, we created a reporting tool that allows people to submit reports of blocks they consider to be inappropriate. Working with a small group of volunteers, we collected over 60 reports of incorrectly blocked sites between 1st January and 31st March 2012.11 The reports included bars and personal and political blogs through to political advocacy sites. These are ten examples of reports of inappropriate blocks we received via Blocked.org.uk: 1. ‘Tor’ (www.torproject.org). We established that the primary website of this privacy tool (meaning the HTTP version of the Tor Project website, rather than connections to the Tor network) was blocked on at least Vodafone, O2 and Three in January. 2. La Quadrature du Net (www.laquadrature.net/en). The website of this French ‘digital rights’ advocacy group was reported blocked on Orange’s ‘Safeguard’ system on 2nd February. La Quadrature du Net has become one of the focal points for European civil society’s political engagement with an important international treaty called the Anti-Counterfeiting Trade Agreement. The block was removed shortly after we publicised the blocking. 3. Shelfappeal.com was reported blocked on 15th February 2012 on Orange. This is a blog that features items that can be placed on a shelf. 4. Septicisle.info was reported on 7th February, and was blocked on Vodafone, Orange, and T-Mobile. This is a personal blog featuring political opinion pieces. It does not contain any adult content. 5. The Vault Bar (www.thevaultbar.co.uk) in London. We established that the home page of this bar was blocked on Vodafone, Orange, and T-Mobile on 6th February. 6. St Margarets Community Website (www.stmgrts.org.uk), is a community information site ‘created by a group of local residents of St Margarets, Middlesex.’ Their ‘mission is simple - help foster a stronger community identity.’ We established it was blocked on Orange and T-Mobile on 8th March. 7. eHow.com is an advice and educational site. It provides tutorials on a wide range of everyday issues, from ‘navigating after-school care’ to ‘small space garden tips’. We established it was blocked on Orange on 9th March. 8. Biased-BBC (www.biased-bbc.blogspot.co.uk) is a site that challenges the BBC’s impartiality. We established it was blocked on O2 and T-Mobile on 5th March. It is classified as a ‘hate site’ by O2’s URL checker 9. Yomaraugusto.com is the home page of a graphic designer, offering a portfolio of his art and design work. This was found to be blocked on Three and Orange on 6th February. 10. Exquisitetweets.com allows users to create one-page threads to save or share from conversations on Twitter. This site was blocked on Vodafone, Orange, and T-Mobile on 15th February.

Just reading what was blocked is, in my opinion, enraging in and of itself. I mean, Squaring the Net is, by itself, a deeply concerning example of of over-blocking. But really, how surprising is this exactly? This isn't the first time censorship systems were used to censor critics. Back in February, what was apparently a case of inadvertent censorship, an anti-piracy outfit wound up censoring URLs from TorrentFreak and TechDirt on Google. The outfit quickly apologized and had the URLs re-instated. Another more glaring set of examples was from Australia at the height of the internet censorship debate in the country. In 2009, Australia blocked Wikileaks. Another famous example of over-blocking in Australia was when the web filter had websites like dental clinics and a kennel operator included on web filtering blacklists. I, for one, was concerned about internet censorship filtering out legal websites from the beginning. Every time we've watched censorship take place on the internet, we've seen innocent websites get put on these blacklists. When we start talking about any sort of irreparable harm, real or imagined, done by websites that supposedly infringes on copyright, and we get to the point of making courts ordering ISPs to start censoring the internet, why don't we also talk about any irreparable harm done by actual censorship? If a web start-up get's blocked because of something wrong in the system whether it be human or technological, that company is going to be harmed. We're not even getting to the part of how much time, effort and money would be necessary to lift an improper ban in the first place. In any event, this sort of thing is a clear cut case of innocent people getting screwed. This is also why I think it's outrageous that when we start to talk about censoring websites in other countries, there is a lack of discussion of what happens when a website is wrongly blocked in the first place (or what sort of procedure is involved that causes as little harm to the victim as possible). All we hear instead is how we should be trying to go out and get the bad guys. One memorable line for me when trying to ask for safeguards was the asinine response of "You’re either with us or you’re with the child pornographers." (note: this came from Canada while discussing surveillance legislation). Another comment while discussing online filtering in Australia was that an unfiltered internet has no place in a democracy. This is a big problem. We point out the potential problems. The problems are ignored and we're brushed off as extremists or whatever the name happens to stick for proponents. Then, the very problems we are concerned about ends up happening for real and the whole thing becomes one big mess. When looking at the international stage, it leaves one to wonder - are such problems being ignored because of ignorance or is it because the idea was to silence critics in the first place and this was a clever back-door way to accomplish this? (Hat tip) Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

The Battle Over the Trans-Pacific Partnership Agreement Continues

Drew Wilson — Mon, 14 May 2012 14:00:53 +0000

While the threat of SOPA (Stop Online Piracy Act) potentially causing absolute chaos on internet and innovation may have been postponed for now, that doesn't necessarily mean that the fight to save the internet is over. While the SOPA debate is currently more or less dormant, the battle over the Trans-Pacific Partnership (TPP) is still ongoing.

For those who may have forgotten about what is being discussed in the TPP, we can get a decent summary of the more controversial portions of the agreement from Wikipedia which, in part, reads:

1. Include a number of features that would lock-in as a global norm many controversial features of U.S. law, such as endless copyright terms. 2. Create new global norms that are contrary to U.S. legal traditions, such as those proposed to damages for infringement, the enforcement of patents against surgeons and other medical professional, rules concerning patents on biologic medicines etc. 3. Undermine many proposed reforms of the patent and copyright system, such as, for example, proposed legislation to increase access to orphaned copyrighted works by limiting damages for infringement, or statutory exclusions of "non-industrial" patents such as those issued for business methods. 4. Would eliminate any possibility of parallel trade in copyrighted books, journals, sheet music, sound recordings, computer programs, and audio and visual works. 5. Requires criminal enforcement for technological measures beyond WIPO Internet Treaties, even when there is not copyright infringement, impose a legal regime of ISP liability beyond the DMCA standards. 6. Requires legal incentives for service providers to cooperate with copyright owners in deterring the unauthorized storage and transmission of copyrighted materials. 7. Requires identifying internet users for any ISP, going beyond U.S. case law, includes the text of the controversial US/KOREA side letter on shutting down web sites. 8. Requires adopting compensation for infringement without actual damages. 9. For copyright and trademark, criminal punishment would apply even to non-for-profit infringement.

It's not hard to see this as the next SOPA. One wonders if just talking about copyright in a manner that is not approved by, for example, major record labels would subject people to criminal prosecution like what I'm doing here. Of course, this isn't a complete list of items contained within the TPP. On another site created by Public Knowledge, there's more possible provisions in the agreement:

The TPP would encourage your ISP and the content industry to agree to institute measures such as three strikes—which kicks you off your internet connection after three accusations of copyright infringement—and deep-packet-inspection—which is akin to the USPS opening your mail. While we can not be sure exactly what is in the TPP, these examples are derived from a copy of the TPP’s IP chapter that leaked in February last year, the provisions that were reported to be part of earlier drafts of ACTA, and previous free trade agreements that the US has signed.

It's no wonder some have referred to this as the agreement that contains everything the record labels failed to get in ACTA. Many have launched various campaigns to stop this agreement. For example, back in February, the Electronic Frontier Foundation (EFF) launched a campaign to tell US lawmakers that a backroom deal to regulate the internet was not acceptable. More recently, the EFF sent out a letter to their supporters:

This week in Dallas, trade representatives are secretly negotiating new regulations for the Internet – including intellectual property provisions that could choke off online speech. The Trans-Pacific Partnership (TPP) Agreement may be even worse than ACTA; it could tie the hands of democratically-elected legislators and create new, international standards for intellectual property enforcement. Worst of all, Internet users and free expression advocates like EFF aren’t allowed in the room and are forbidden from seeing the negotiated text. [...] U.S. Trade Representative Ron Kirk claims they have made “extraordinary efforts” to include public stakeholders in negotiations, but this couldn’t be further from the truth. Like ACTA, negotiations have actively excluded civil society and the public, while welcoming private industry representatives with open arms. EFF’s International IP Director Gwen Hinze traveled to Dallas to demand transparency, but she wasn’t allowed to see the draft text or be present for the negotiations. Here's how Gwen described the tactics the USTR is using to shut Internet users out from the negotiations:
Unlike previous negotiation rounds, there will be no official forum for stakeholders to present their views to the assembled TPP country negotiators. Instead, stakeholders are being asked to register their interest in sponsoring a table to provide negotiators who might so happen to stroll past with information on particular topics.
The public should be front and center in these negotiations, not relegated to a table outside.

During a recent conference discussing the TPP, the Yes Men also found a way to protest this in their own way. They managed to walk up to a podium and gave Ron Kirk, U.S. Trade Representative and former mayor of Dallas and the TPP negotiators an award for being the "2012 Corporate Power Tool Award". A video of what happened was posted: By the end, it became clear that the negotiators weren't entirely happy with the idea of being considered tools for corporations. You can read more on what the Yes Men had to say on their press release page. Recently, there have also been reports that the TPP is nearing completion with the goal of wrapping up by the end of the year. Most of what people know about what's in the text are derived from leaked copies of the agreement. Copies of the text can be found on the Public Intelligence website. Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

What Filesharing Studies Really Say – Part 13 – Lower Prices Decrease Filesharing and Increases Sales

Drew Wilson — Mon, 14 May 2012 14:00:38 +0000

We're approaching the final stretch in our long-running series of what file-sharing studies really say. This study discusses the price of content and what affect it would have on file-sharing.

The study is entitled "Estimating consumer preferences for online music services" and was published in 2010 in the journal Applied Economics. We should note that this study is mainly done in Korea, but I personally don't see why it can't apply globally as this is seemingly basic market knowledge. The study begins by explaining it's aim as follows:

In this study, we analyse consumer preferences with regard to attributes of online music services. Based on estimated quantitative information about those preferences, we conduct a simulation to analyse the effects of legal action and pricing strategies policy agencies and the music industry might pursue.

Like numerous studies we've reviewed in this series, this study notes that while the industry blames a drop in music sales to file-sharing, data shows that record labels benefit from file-sharing due to the increase in ability to sample new music. Furthermore, the study notes:

Buxmann et al. (2005) find that lowering prices may be a more effective strategy than restrictive measures such as lawsuits to enable the music industry to overcome flagging sales.

So, an actual contradiction to the previous study we covered which recommends the continuation of litigation when there is a viable business alternative offered. This study disagrees and says that price point is actually more beneficial than litigation. The study describes how it collected the data with the following:

We used conjoint analysis to obtain the data. Because there are many P2P networks and online music services in Korea, consumers can obtain digital music files in various ways and that poses a difficulty for using a revealed preference approach. Accordingly, we concluded that a stated preference approach, especially conjoint analysis, would be best for meeting our purposes. In conjoint analysis, levels of attributes describing a good, service or policy are combined to build hypothetical alternatives. Respondents then state their preferences for hypothetical alternatives and statistical models are used to analyse the responses. We obtained the data from a survey carried out in July 2006 among 224 respondents ranging in age from 20 to 59 years and living in Seoul, Republic of Korea. We divided Seoul into four blocks and implemented random sampling. To improve reliability, the survey was conducted through personal interviews. We restricted the dataset to consumers who had experience in downloading digital music through an online music service or a P2P network.

So, another survey. The study then notes that the price on a per-song basis is about 450–540 won while a subscription service is about 35 000 won a month. In US dollars, that's about 39 cents to 47 cents per track or $30.64 USD per month on a subscription service. Of course, the thing to remember is that the cost of living and average wages are probably different in this part of the world so whether these people are getting a good deal or not is depending on numerous other factors as well. The survey found that search and download times are very important. If you can find something quickly and download it quickly, that's a very good thing to have. Another finding is that the willingness of consumers t use unauthorized file-sharing depends on the ability to find something, download rates and the risk of getting caught. Not exactly surprising as far as I'm concerned. What is of interest is the following (note: WTP means Willingness to Pay):

The mean estimate of WTP for downloading one digital music file is 70.2 won/month ($0.074). Since the WTP for downloading one music file is markedly less than the actual price – 350–540 won ($0.37–0.57) – offered by legal online music services, we can infer that Korean consumers have obtained digital music files for nothing until now and that situation is reflected in the estimated WTP. Therefore, such consumers have an incentive to obtain music files illegally from P2P networks from the viewpoint of price and this result can explain why Korea is home to so many P2P networks and users.

So, what this suggests is that price point might drive people to unauthorized filesharing. Additionally, the study notes previous attempts to suppress file-sharing by use of flooding file-sharing networks with fake files. the study then ran a simulation and found something rather interesting:

In all these results, the share held by Group A is quite large and that of Group C is small. This seems to reflect the fact that WTP for downloading one music file is quite smaller than the actual price of music, a finding that coincides with the existence of numerous P2P networks and users in Korea.

In another finding, the study found the following (note: transactional cost is referring to the time it takes to find and download an unauthorized copy of a song):

cutting the price of digital music files is more effective than increasing transaction costs if we want to increase the number of consumers who purchase the music whether illegal file sharing is possible or not.

the conclusion, therefore, is quite fascinating:

The results show that the Korean consumer’s estimated WTP for downloading one music file is remarkably less than the actual price of a file. Therefore, from the point of view of price, consumers have an incentive to obtain music files illegally from P2P sites, and that result can explain the existence of numerous illegal P2P networks and users in the country. Korean consumers are sensitive to lengthening the time it normally takes to search for and download one music file. The results also show that Koreans are not sensitive to increasing the extent (variety) of music available at online music services, but they are very sensitive to the prospect of being penalized (i.e., having legal action taken against them) for illegal music file sharing The simulation results show that increasing the transaction costs of illegal file sharing is an effective way to inhibit illegal file sharing. This result justifies taking legal action against users of file sharing and implies that online music companies should try to make searching for music on their sites more convenient and minimize download times. The results also show that increasing transaction costs does not affect the number of potential consumers who will consider buying digital music online. To increase the pool of potential consumers, online music companies should consider a pricing strategy. To some degree, then, lowering the price of digital files may benefit onlinemusic companies. Yet, the combination of increasing transaction costs and lowering prices shows a greater effect in reducing the number of people engaged in illegal file sharing and augmenting the number of potential online music customers. Therefore, this result argues for a government agency to take legal steps and for music providers to experiment with lower prices, together.

In other words, while making file-sharing more difficult for users may be effective, it will not necessarily bring more customers to the music stores. However, lowering the prices of music, on the other hand, will garner more music sales. It is, as far as this study is concerned, theoretically possible that lowering prices and pursuing litigation tactics and flooding file-sharing with fakes could be the most effective way to prevent people from downloading music from unauthorized sources. So, I think that, as far as this study is concerned, it depends entirely on what you want to accomplish in the market. If you merely want to curtail file-sharing, then lowering prices of the authorized sources and disrupting file-sharing is the way to go. If you want people buying your product, then simply lowering the price of the authorized copy is the way to go. Litigation and cracking down on filesharing, in and of itself, won't necessarily create customers. Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

Anonymous Web Browsing with “Hide My Ass!” Chrome Extension

Jared Moya — Mon, 14 May 2012 08:48:29 +0000

Official HMA! Web Proxy extension for Chrome allows easy switch to secure, anonymous web browsing.

With varying degrees of online censorship making the rounds around the world it's important for Internet users to have the means to be able to access content in spite of it. Sure, there's VPNs, proxy software , and other methods that require software and tasks independent of your web browser, but the Hide My Ass! Web Proxy extension for Google Chrome simplifies it all by allowing users to easily redirect web traffic through its anonymous proxy network right from within the browser. Hide My Ass! Web Proxy has no third-party ads or annoying popups seen with other proxy extensions for Chrome. It works with all the popular video-hosting sites such as YouTube and adult tubes that many people are unable to view at work, school, or in countries with repressive content filtering regimes in place. It has a list of proxy servers available in multiple countries, not just one, and uses SSL encryption for all websites. So why use a web proxy, as if it wasn't clear already? To visit websites anonymously, conceal your web browsing history from others, mask your location from prying eyes, bypass geographic content restrictions, and to, of course, bypass site and content filters. Hide My Ass! Web Proxy features:

One click proxy. Whilst already browsing a website, click the extension icon to browse the website anonymously. Alternatively click the icon on a new tab to be shown a web proxy form and specify a website to proxify.

Select one of 20 web proxy domain names (not just HideMyAss.com).

Select a specific web proxy server (USA, UK, NL).

URL obfuscation. Choose between encoded and encrypted web proxy URL's.

SSL encryption. Choose between HTTP and HTTPS web browsing.

Option to always launch web proxy in incognito mode for increased anonymity.

Option to always launch the web proxy in a new tab.

Option to always ask for manual URL entry (and not redirect based on address bar entries).

So how does it work? Easy. Just download and install the extension (Chrome required). Once done an icon will appear in your toolbar. Right-click and select "options." Make sure "HideMyass.com" is selected for proxy site. You can select others if you choose, but the server sites will be based in the USA only. Save your settings when you're done. Notice that you cane change server locations: USA, the UK, and the Netherlands. Now, to visit a site anonymously, click the toolbar icon and enter the URL of the site you would like to proxy. As an example I entered YouTube.com using a UK proxy server. Notice how it has changed my location filter to the UK. Now I can access content that was otherwise not accessible by US users. It's that easy. Stay tuned. jared@zeropaid.com | @jaredmoya Download Hide My Ass! Web Proxy

User Backlash Causes Adobe to Rethink Charging for Security Updates

Drew Wilson — Sun, 13 May 2012 14:05:34 +0000

It can be difficult at times to convince people not to pirate expensive software, but charging for security updates certainly isn't going to help. After bad press and user backlash, Adobe has since backed of their plans to charge its customers extra for critical security fixes.

We first heard about the story on CNet where Adobe said that it'll be charging users money for security upgrades. If the idea isn't insane enough, just check out the reported prices Adobe planned on charging for users:

According to Adobe's site, it will cost at least $199 U.S. to upgrade to Photoshop CS6, $249 to upgrade to Illustrator CS6, and $99 to upgrade to Flash Professional CS6.

When I read that, the first question that came across my mind was, "Has Adobe totally lost their minds?" Legitimate users are paying a huge amount of money for their products and not security updates are going to cost up to a couple hundred dollars? Users paid for the product, they expect it to be secure and fully functional. Otherwise, they didn't get what they paid for. I would go so far as to say that this is less ethical than just pirating this stuff. I mean, if software vendors are upset that their products are getting pirated like crazy, what do they think the reaction will be if they pull a stunt like this? Apparently, user back lash and bad press was enough to cause Adobe to rethink their position. According to SecurityWeek, Adobe has decided to create free security patches instead (hat tip). From the report:

“In looking at all aspects, including the vulnerabilities themselves and the threat landscape, the team did not believe the real-world risk to customers warranted an out-of-band release for the CS5 version to resolve these issues,” an Adobe spokesperson originally told SecurityWeek. But since then, and after complaints, bad press, and user backlash, Adobe has changed its tune. The company now says that it is in the process of developing a patch that won’t essentially force users to upgrade in order to fix the security vulnerability. “We are in the process of resolving the vulnerabilities addressed in these Security Bulletins in Adobe Illustrator CS5.x, Adobe Photoshop CS5.x (12.x) and Adobe Flash Professional CS5.x, and will update the respective Security Bulletins once the patches are available,” Adobe’s David Lenoe wrote in a blog post late Friday. Developing a patch, especially for three different applications, can be costly and time consuming. Developing these patches consumes development resources, then must run through a QA process, and the patch needs to be communicated and distributed to users. And for a company like Adobe with a massive customer base using its Photoshop, Illustrator, and Flash Professional, the bandwidth cost alone can be substantial.

I, for one, have a hard time thinking of a situation where a software developer is charging for security updates. Sure, I can see upgrades to new and improved software which has bigger and better features and an upgraded user interface, but simply for security updates is a completely different story. Especially when we're talking about Adobe products where to buy a single license costs hundreds of dollars which means that big user base Adobe complained about also paid Adobe an incredible amount of money - more than enough to pay a couple programmers to patch each version they have to offer. How this attempted move made any sort of logical business sense for Adobe is beyond me. Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

What Filesharing Studies Really Say – Part 12 – Media Industry Must Adapt

Drew Wilson — Sun, 13 May 2012 14:00:45 +0000

The first half of our investigative reporting was interesting and this second half is certainly not disappointing either. This next study discusses a simple argument many have made before - the media industry needs to adapt to a new business model designed for the modern digital era.

Adapt or die. The media industry is like an injured dinosaur. Copyright laws are simply being built to maintain an old business model that just doesn't work today. These are just a small sample in a long list of arguments that point to a lack of adaptation by the media industry. Like many other arguments that don't look good for the industry, this argument has a study back this up too. This study is called "The Impact of Illegal Peer-to-Peer File Sharing on the Media Industry". It was published in 2010 in the California Management Review. Like a lot of other studies we've already reviewed, the study discusses the increase in music sales in the 1990's, but then a decline in CD sales after this time period. Then, citing industry quotes, saying that the major players in the industry blames file-sharing for the decline. The study further comments:

While the media industry blames Internet file sharing for large economic losses, there is little consensus in prior research on its impact on industry revenues. Some studies attribute the downturn in music sales almost entirely to piracy, while others find that the economic impact of illegal file downloads on media sales is negligible. In the latter case, the drop in sales may be triggered by a decline in quality of new music or change in the way people listen to music (e.g., more streaming and fewer CD purchases). Another stream of research indicates that listeners’ ability to sample files for free on P2P networks may increase music sales.

When I initially did the research and gathering these studies, the only studies I found that said that file-sharing was to blame for losses in music sales were published in 2002 and earlier. In other words, a time period when there was little data available on the phenomenon of file-sharing. Since these studies were so old, we discounted them on the basis of trying to find up to date information. Finding information less than a decade old seemed advantageous. The results we've seen so far in the series pretty much speaks for themselves - very pointed questions on whether file-sharing was really to blame and an ease in finding alternative explanations on the fall of music sales including increased competition from other industries like the gaming industry, a switch from an album market to a singles market, the halting of the practice of price fixing in the same period and, as this study suggests, a switch from purchased music to streaming music to name a portion of reasons why there was a decline in music CD sales. The study then discusses what is being investigated:

In view of this controversy, we conducted empirical tests to ascertain whether the financial market perceives the industry’s efforts to tighten and enforce copyright legislation as having positive consequences for the long-term profitability and survival of member firms.

The study looked at shareholder reaction and revenue streams as a result of litigation to name two points of interest. Later on in the study, the study listed reasons why file-sharing may not be detrimental:

a majority of those who download media files may be unwilling or unable to purchase them. Preventing free downloads by such users results in lower social benefits without any increase in revenue for media providers. Further, large media companies may historically have stifled creativity by having excessive influence on deciding what types of works get produced and marketed as well as maintained artificially high prices—e.g., by paying radio stations to play certain numbers, selling more expensive albums rather than the single tracks desired by music fans, and promoting more popular artists at the cost of those with niche followings (and smaller potential profits). Lower search, promotion, and distribution costs associated with the Internet may loosen the stranglehold of large companies and promote creativity while providing works that better cater to diverse consumer tastes at competitive prices.

We're easily able to corroborate a number of these comments with previous studies we've covered already in this series so far. For example, we've seen studies that said that file-sharers can discover new music while others are downloading content they are either unable to or not willing to pay money for in the first place. Those factors would lower perceived losses in the industry. Another point we've seen agreement is the effect of price fixing on CD's in the early 2000s. The study continues at length on the positive influences file-sharing plays on music sales. The study also goes on to discuss the monopolistic control a small handful of companies have had on the entire music and movie industries. Again, judging by previous studies alone, there are no surprises given that, economically speaking, a monopoly makes a market inefficient. The study also reviews what the distribution models of these industries (ala bricks and mortar stores, selling music on a CD, etc.) as well as touch on disruptive technology. The study also reviews the roll of Napster and how it changed things in the market. Again, nothing really new here. In the midst of the review, the study notes the following:

While the media industry has successfully lobbied Congress for increased legal protection and higher penalties for infringement, some legal scholars have questioned the need for copyright protection in an industry where search and distribution costs are low and users are prepared to bear them.

Certainly, with what we've seen in this series so far, there are serious questions on why the industry is even pursuing activities such as litigation when they are proven ineffective so far as the original goal of providing a deterrence for the whole file-sharing community is concerned. The study also discusses the various pieces of legislation introduced including The Copyright Act of 1976, The Communications Act of 1984, an amendment to copyright in 1989, Audio Home Recording Act (AHRA) of 1992, The No Electronic Theft (NET) Act of 1997, the Digital Millennium Copyright Act of 1998, and The Family Entertainment and Copyright Act of 2005. Various copyright bodies like WIPO and pending legislation were also discussed like the Pirate Act. Numerous legal cases like the Betamax case were also reviewed. Later on, what seems like a mundane financial exercise on the surface was actually a little interesting. The study looked at the efficient market hypothesis and compared it to the litigation campaign. What it found was quite interesting indeed:

Our results show a positive, abnormal stock price change on the event date on average. This price change is statistically significant for both parametric and nonparametric tests as well as for both methods of computing abnormal returns.43 Mean CAR on the event date, although statistically significant, is small in magnitude (approximately one quarter of 1%) probably because the potential benefits of each lawsuit may not accrue to all of our sample firms, and because several sample firms (e.g., GE) have major operations in lines of business outside of media. The price changes are generally insignificant in the pre- and post announcement windows. Separate tests conducted over the three types of events (lawsuits filed against individuals and firms, and enactment of legislation) suggest that the stock price reaction to each type of event is of similar magnitude, i.e., of the order of a quarter percent.45 These results are consistent with the contention that current and past efforts by the media industry to check illegal file sharing over P2P networks through stricter copyright laws and lawsuits against violators have a significant positive impact on expected long-term profitability and economic viability of major media firms.

So, in short, every time a batch of lawsuits went out, the stock bumped up a little temporarily. When a new piece of anti-piracy legislation was passed, the stocks of these companies went up a little. Not a lot, but there was a noted difference even if it was insignificant. I think that actually speaks to one motivating factor of these lawsuits. If the stock needed to be up a little, file a few thousand more lawsuits and the stock prices of these companies go up. An interesting explanation for the lobbying and lawsuits indeed. Nothing really sustainable, but a short term gain in the stock markets. The study then went on to discuss a potentially successful business model, saying the following:

A successful future business strategy for media firms would focus on an integrated approach to monetizing access to musical and video works (as opposed to only selling CDs or DVDs) coupled with combating infringement of copyright violations through tightening legislation

In other words - get a viable business model that is reasonable that consumers can accept, then sue the blistering [expletive] out of the violators after. Cory Doctorow once advocated this even. Of course, the industry has yet to put forth a viable and reasonable business model which makes the litigation pointless. Does the industry have an attractive alternative to piracy? No. Then forget about the lawsuit campaign until they do. This last point is further driven home later in the study:

As previously mentioned, the media industry’s enforcement efforts have so far been directed at dissuading unauthorized file sharing through lawsuits against P2P software creators and users together with restricting copying and playback through DRM technology. While the industry has been successful in shutting down several P2P networks, its strategy has been largely unsuccessful in deterring illegal file sharing.

Not surprisingly, the study concludes with the following:

the new technology has the potential to expand demand by enabling users to access media products anywhere on a variety of devices, sample new products, and use them creatively and as part of a broader social experience. The media industry needs to develop new business models to capture hitherto untapped revenue streams arising from new technology and to better cater to changing customer tastes. [...] Our empirical analysis suggests that the media industry should continue its current legal strategy to deter unauthorized file sharing. Additionally, the industry must discover new ways to monetize its products and create value. We presented several business strategies that permit media firms to fight unauthorized file sharing over P2P networks and utilize recent technological advances to cater to changing customer tastes. These include changing social norms in the Internet community (which currently regards the sharing of copyright-protected material over P2P networks as morally permissible) through educational campaigns, simplifying the process of obtaining copyright permission to encourage legal use of copyright-protected artistic works, and adopting new business models to monetize access to artistic works in a changing business environment.

Even though this study does advocate the continuation of litigation, it recommended that the media industry also adapt to allow better access to copyrighted works as well as something to entice potential customers away from unauthorized sources to authorized sources. Unfortunately, in practice, we've never really seen a comprehensive global strategy to better sell or otherwise allow access to various works that plays off of a wide range of musical tastes. At best, there's a few small pockets of walled gardens like Pandora (only for US users) and Spotify (few select countries). I think this is certainly insufficient to be considered an enticing alternative to piracy. If the industry can't adapt, then, as we've seen in this study, it kind of renders litigation and government lobbying rather pointless. Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

What Filesharing Studies Really Say – Part 11 – Public Performance Profits Skyrocketing

Drew Wilson — Sat, 12 May 2012 14:00:16 +0000

We are continuing the second half of our long-running series on what various file-sharing studies really have to say. This study examines the effect file-sharing has had on live performances or live concerts for the artists and finds that profits have increased dramatically.

The study of the day bears the title, "Supply Responses to Digital Distribution: Recorded Music and Live Performances". It was posted online in 2005 and was written by Julie Holland Mortimer of Harvard University and Alan Sorensen of Stanford University. Towards the beginning of the study, one part states the following:

However, the debates about copyright protection for information goods have tended to overlook (or at least underemphasize) the simple fact that these goods typically have many different uses and means of consumption. For example, recorded music can be downloaded easily from the internet (through legitimate means or not), but the experience of attending a concert cannot be downloaded.

This is technically true even though videos of live performances can be downloaded. Personally, though, my gripe of live performances is that the music tends to be too loud when the technicians cranks the music up to something like 120 decibels. I can appreciate how great it is sometimes to just crank up the volume of the music, but it's always like they took what is sufficiently loud and increased the volume by about 20%. That's usually why I always pay attention to positions of the speakers and looked for parts of the mosh pit or parts of the stadium seats least likely to be the loudest and hang out there. Also, on a personal note, when your moshing in the mosh pit, pick people up who fall over to prevent them from getting trampled. I know I've probably personally saved a few souls picking people up off the ground in the middle of the mosh pit. So, on with how the data was collected:

We have collected a detailed dataset covering sales of both recorded music and live performances for 2,135 artists. The data span 10 years (from 1993 to 2002) and include all popular music concerts performed in North America during this period, as well as weekly CD sales from 100 cities, for each artist. The detail provided in the data is very rich: for each concert (ranging from small jazz clubs to stadium tours of international rock stars), we observe revenues, ticket quantity, high and low ticket prices, the identities of all performing bands (the headline act as well as any supporting acts), and the place and time of the concert. The data on CD sales provide the band and album name, and the quantity of each album sold, by week, in 100 Designated Market Areas in the U.S. (similar to an MSA). The merged dataset contains all album sales and concert activity for every band in each of the 100 markets in the U.S. in every week over ten years.

So, this is a very wide array of music - though still mainstream type music. So, next, the study touches on the revenue an artist makes on music albums:

Royalty rates range between 10-18% of retail, with the typical rate being 12%; however, artists earn somewhat less than this due to various deductions that are usually built in to the contract. A reasonable estimate is that the artist earns around $1.00 for every CD she sells.

This, in my view, highlights one of the biggest problems in the music business. Why does the artist always hardly get any money from album sales? If you want to discuss why artists earn so little when they sell millions of albums, the contract and the percentage is a great place to start. I would think that it's fair to have the percentage more towards 50%, not barely get mere pennies per album. Let's put this kind of math into another perspective: An album could cost, say, $10. The artist in question could find that, through their major record deal, sell 10,000 albums. That's $100,000 in revenue gross from sales for the year. For the band, that earns $10,000. Since this is a small band, this will be divided three ways which would amount to $3,333.33. That's not tying in any other costs like the down payment for the loan that the band makes with the label which has been known to throw the band into millions in debt. Now, compare this with going independent. Let's say the album earns the band $10 after the cost of manufacturing. How many albums must the band sell to earn the same amount as with the record contract? The answer is simply 1,000 albums. One tenth of the number of sales. If you're touring all over, that's not that huge of a proposition. There's no big loans for the band to pay off the record label either. The only factor to take into account after this is simply taxes. No file-sharing to take in to account here. It's strictly dealing with the label. The study later on discusses revenue from live performances and says that the data for their sample period between 1993 and 200 "show concert revenues and average ticket prices in each year, which also increase sharply from an average ticket price of $18.87 in 1993 to an average ticket price of $35.77 in 2002 (reported in December 1997 dollars). Note that the number of concerts and concert revenues both increased quite sharply in 2001 and 2002, at which time file-sharing had become widespread. The increases in price were also most dramatic in 1999-2002." Even further down, we have the comment on what happened to CD sales. The study says, "CD sales rise quickly until 1998. In 1999, sales of CDs drop modestly, and in the years after 1999, CD sales drop quickly, back to 1996 levels." The study also wanted to be clear in that "we wish to convey the following three significant trends in this industry. First, concert prices and quantities are increasing over time. Second, CD revenues and quantities are decreasing in the second half of the sample. Finally, the aggregate importance of concert revenues is increasing over time." The study went on to discuss how live performances boost CD sales. Later on, the study goes back on the topic on if there was a relationship between file-sharing and the drop of CD sales. What was said was this:

Although little concrete evidence has been brought to bear on the question of which artists or genres have been most affected by file-sharing, the conventional wisdom seems to be that file-sharing was more active for popular music genres (like rock and rap) than it was for jazz or classical music. If in fact this was the case, we should expect the spillovers to have declined more sharply for rock and rap artists than for jazz artists. The table suggests the opposite: the change in the spillover effects of concerts appears to have been most pronounced in the Jazz/Latin category. However, we are reluctant to draw strong inferences from genre comparisons, because our grouping of artists into genres is very coarse, and (more importantly) we suspect the accepted wisdom about file-sharing—i.e., that it was most prevalent for pop music—is at best an oversimplification.

I think it is interesting that in genre's that weren't as well pirated experienced an even greater decrease in music sales. However, this only remains to be an interesting note. Another point further down in the study is certainly interesting as well:

Assuming concert demand is an increasing function of listenership, digital sharing of recorded performances should increase the overall demand for live performances. With sharing, each purchased CD potentially results in many listeners. This could result from direct sharing, as when an individual purchases a CD and then burns copies for several friends using a CD-writer, or from broad distribution via peer-to-peer networks. In principle, even one purchased copy of a CD could translate into tens of thousands of actual listeners. In the absence of such digital redistribution technologies, by contrast, the number of consumers listening to an artist’s album would roughly equal the number of albums purchased.

I would argue this point alone should be an excellent argument for strong provisions of fair use. With a CD encoded with DRM (Digital Rights Management), the album also restricts activities that would increase potential sales and general knowledge of the bands existence legally speaking. So, when a country introduces anti-circumvention laws, those laws are, in fact, harming artists abilities to promote themselves. The moment DRM is put on an album, that artist is effectively saying goodbye to potentially hundreds of thousands of new fans or criminalizing the activities that would give artists potentially hundreds of thousands of new fans. What I found a little cryptic, though, was the conclusion which starts by saying this:

While changes in distribution technology appear to have eroded the profitability of selling recorded albums, our preliminary findings suggest that these changes may have simultaneously boosted demand for live performances.

In decrypting this, we were able to find that this study is not saying file-sharing is responsible for any decline in music sales - at least, as far as this line is concerned. The conclusion further says:

For artists, the decline in revenues from recorded music after 1998 is striking, but appears to have been more than offset by a concomitant increase in concert revenues. Total industry revenues, on the other hand, have not fully recovered, despite the increasing contribution of concert revenue to the total. [...] artists usually contract with independent promoters to produce their concerts, with little (if any) of the concert revenues reverting to the artist’s record label. Not surprisingly, the loudest complaints about the effects of internet file-sharing have come from record labels and their parent distributors. Since concerts capture returns to investments at least partially made by record labels, it seems likely a new equilibrium will emerge in which those labels play a larger role in concert promotion and claim a larger share of concert profits. [...] For the music industry, some of the most interesting unanswered questions concern the differential impact of internet file-sharing across artists. It is quite likely that file-sharing is a boon to some artists and a bane to others, but to date there is little empirical evidence indicating which types of artists gain vs. lose.

I one takeaway message one can get from this study is that nothing in here makes a correlation between a drop in music sales and the arrival of file-sharing. At best, you could say that there is a coincidence that they both emerged at similar times, but to point to the two and say that there is a cause and effect is simply misreading what is being said here in this study. As I read this study, I kept asking, "OK, is there a relationship between file-sharing's rise and a drop in CD sales?" and ended up not having that question answered. If you were hoping to find a connection between a fall in music CD sales and file-sharing, you'll never really get that in this study. Meanwhile, there is this rise in live performances in this time period. In reading this paper, there was a few possible explanations for this including the fact that the artist makes more money from touring than in album sales. I don't think that is unreasonable. If an artist makes $5,000 on album sales in a year and $250,000 in live concerts, where do you think the artist is going to focus their efforts on? As for whether file-sharing has caused the increase in ticket sales or not, that was actually not entirely clear. All we know is that in this time period, public performance revenue has been going up. So, I would say that this is clear evidence that there is money to be made in music. Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.