Monday, June 16, 2008

Dinosaurs on the prowl

Jane Hamsher describes the Associated Press' trial-balloon effort to stop bloggers from even linking to them, much less quoting excerpts from their articles: Associated Press: Dinosaurs of the Internet Firedoglake blog 06/16/08.

Dinosaur instinct? Corporate plot? Another Dick Cheney idea to suppress dissent and free discussion?

There is an organization, the Electronic Freedom Foundation, which has been fighting to keep the Internet free. They don't have any comment up about the AP's new insanity as of this writing. But they've been fighting the good fight for a while. And their work is obviously far from done.

I try not to underestimate the ability of corporate executives to make just plain bonehead dumb decisions. You know those economic models where all actors in the marketplace make rational decisions based on full information on their options? They describe a parallel universe that works differently from ours. On the surface, this looks similar to the recording industry's suicide pact among themselves years ago when they obsessed over online filesharing. The marketing data showed that most people who downloaded songs for free went on to buy the entire CD. They had a great marketing phenomenon going on, that they didn't even have to pay for. But these wizards of business went on a legal jihad to shut it down. CD sales started crashing immediately after the recording industry won its landmark lawsuit suppressing the Napster service. The industry has never fully recovered.

All this happened despite the fact that online music sales were technologically feasible 10 or more years ago. You know, like now you can go to Amazon and buy songs for $.99 each? It's easier for the consumer to buy. The record companies save the costs of packaging, shipping and handling, and returns from record store chains. I don't know, but I'll bet that their margins are higher on songs sold by download than those sold on CDs. The industry, not surprisingly, poor-mouths about how they don't make enough from Amazon sales.

Check out this piece on the recording industry's dinosaur adventures, Does She Look Like a Music Pirate? by Heather Green Business Week 04/24/2008. The report is about a lawsuit, which the article makes seem promising, by a woman named Tanya Andersen, who decided to fight back when the RIAA (Recording Industry Association of America) sued her.

The case her attorneys are making is that the industry's famous legal actions against downloaders of unauthorized music looks a lot like a shakedown racket:

When the RIAA first set its sights on her three years ago, Andersen was looking after her eight-year-old daughter by herself in the wake of a divorce. It was December, 2004, and she pulled an envelope out of her mailbox. Ripping it open, she found a letter from Verizon Communications (VZ), her Internet service provider, saying it was releasing information about her. With it was a copy of a page from a subpoena. Andersen had earned a two-year legal secretary degree while in community college, but she had no idea what the documents meant. "I thought to myself: "I haven't done anything wrong,'" she says.

A second, more ominous letter arrived in early February, 2005. The document, from a law firm in Los Angeles, said she was being sued by several record companies for copyright infringement because she had shared their music with others over the Net. "The evidence necessary for the record companies to prevail in this action has already been secured," the letter states. It informed her that the minimum damages for each copyrighted song shared was $750 and encouraged her to contact the Settlement Support Center to discuss a financial settlement. If she didn't resolve the issue, she would be sued.

For the first time, Andersen was scared. She tried to e-mail a contact listed in the letter and called the law firm. A few days later her phone rang. "Ms. Andersen, I am calling to discuss settlement," she recalls the person on the other end of the line saying. "Settlement of what?" she responded. The man explained he was calling from the Settlement Support Center as a representative of the RIAA. He had information that she had been caught sharing songs online. To avoid a lawsuit, she would have to pay $4,000 or $5,000, he said. "You're going to have to pay us, or this won't go away," she says he told her.
It turns out that the tracking methods the industry uses has a serious flaw:

[Anderson's attorney Lory] Lybeck also became convinced that there are fundamental flaws in how the RIAA uses IP addresses to identify suspects. MediaSentry is the investigative firm the record industry employs to track pirates. When MediaSentry sees people swapping music on file-sharing services such as KaZaA, it records their IP addresses and user names. Then it goes to Verizon Communications or another Internet service provider to find out who was using that IP address at the time of the piracy.

But errors can arise in a number of ways. One IP address may be assigned to a device such as a Wi-Fi router that can be used by several people at the same time to access the Net wirelessly. So if a visitor or a neighbor decides to steal music over the Wi-Fi network, the homeowner would still be fingered. In addition, some people have IP addresses that change every time they log onto the Net, so the IP address you use in the morning could be assigned to your neighbor that afternoon. Verizon and other Web service providers try to track who has which IP address at what time, but their records can be faulty.

More troublesome, sophisticated computer users can "spoof" IP addresses, or use one assigned to somebody else. They use a simple piece of software to forge the IP address on packets of information sent from their computer, much like someone who puts an address on the back of an envelope that isn't theirs. The people most likely to spoof are the very tech-savvy youngsters also mostly likely to be stealing music. Even if the RIAA had an IP address it believed belonged to Andersen, Lybeck thought, that wasn't necessarily the case.

In September, 2006, the RIAA asked Andersen a curious question: Did she know anyone named Chad? She didn't. But Lybeck tracked him down. Chad was Chad Alstad, a carpet layer who lived in Everett, Wash. He had a MySpace (NWS) page on which he wrote about downloading content from the Net. And his user name? Gotenkito, the same name Eilers had said was used in the alleged piracy. Lybeck was amazed: Alstad seemed a much more likely suspect than Andersen.

Over the next few months, Lybeck and the record industry tussled over Andersen's computer. The court ordered Andersen to hand over the computer, and the RIAA took it to an expert so it could be searched for signs of music piracy. But then the industry's lawyers refused to release the expert's report. Ultimately, Donald C. Ashmanskas, the U.S. District Court judge overseeing the case in Portland, ordered the RIAA to turn over the information, which it did in January, 2007. The result? No evidence of piracy.

Once it got to that point, the industry decided to cut bait and dropped their case against Anderson. But now she's countersuing.

What set Lybeck wondering was that even though the RIAA was claiming huge losses due to filesharing, they were willing to settle with individuals for $4-5 thousand each. The settlement demand seemed disproportionately small to the great harm they were claiming.

Now, the idea of prosecuting your own industry's best customers was a pretty shaky idea to begin with. But the larger assumption was just crazy. Those early filesharing sites were really clunky and slow. If the industry had rushed to get their music online, people would have been buying them online - as consumers are doing now. With MySpace, the recording industry is even trying ways to let people use music. Why? To get the marketing boost. The same kind of marketing boost the original filesharing "piracy" was getting them.

AP seems to be going down the same road the RIAA did. I don't have any factual reason to think that it might involve something more nefarious in intent than bonehead business practices. But, given the fairly obvious business irrationality of the AP's action - they don't even want people to link to their articles! - you have to wonder if they aren't getting pressure from someone like the Republican Party that figures blogs are causing them more problems than they are getting benefits from the Michelle Malkins of cyberspace.

This reminds me very much of the New York Times' brilliant business idea of putting their columnists behind subscription online. I forget how long that went on, a couple of years as I recall. Then they wised up and quietly dropped the idea.

Given the massive dysfunction of the news industry, which makes the late Timmy Russert an icon of journalism, it wouldn't surprise me at all if this weren't just plain corporate stupidity. Jane Hamsher, who invites people to link to her and quote her as all sane bloggers do, explains the basic flaw with this business model:

The AP will probably be slow to learn the lesson, because it will see no immediate impact if people like me won't link to them any more because we don't want to be sued. I mean in our world, how crazy is that? I mean, like I'm going to sue Atrios for linking to me? That's just insane. We live on traffic, our revenues are based on pageviews. The same can be said for the online outlets that the AP is selling its product to -- newspapers across the country. It's the Washington Post and the Houston Chronicle who will feel it if nobody will link to their AP stories. They are, in effect, buying a product that will not generate traffic they need in order to sell ads to support themselves.

If I were running a major metropolitan daily, and I saw my advertising revenues shrinking and my newsroom personnel diminishing as the dead tree business died, and I knew how important it was to generate online traffic to keep the doors open, I'd be thinking ... Reuters. McClatchy. Bloomberg. Anything but AP.

Why pay for a newswire that's going to sue people for linking to you?
From what I know about "fair use" laws, this move by AP is going to go down in flames.

Not to run this into the ground. But I'm just gobsmacked at the business misjudgment this thing shows. "Hey, I've got a brilliant idea! Let's start trying to drive readers away from our articles!" Oh, yeah, that's true genius. I wonder if they came up with that on their own or if they paid a consulting firm several million dollars to develop that strategy? If AP pushes this for a while, it may reach the "New Coke" level of spectacularly misguided business decisions.

The only upside I see to this: maybe Nedra Pickler's sad excuse for reporting will get noticed less often.


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