The Pebble and the Avalanche

Buy Movies Legally, Seller Goes Bankrupt?

Here's an interesting tale of a man who purchased a new monitor, hooked it up to his Windows computer, and promptly found that the computer refused to let him see any of his movies. The culprit is digital rights management (DRM) software, which worried that he might pirate a movie because his monitor worked so wonderfully. The upshot is that because he purchased movies legally, he is in worse shape than if he just pirated them from the Internet.

As usual, the culprit in this case seems to be Microsoft, specifically their DRM software which they can't seem to figure out how to support. But I also have to wonder about the costs of doing business. This particular buyer was highly motivated and intelligent, and managed to get at least some of the problem straightened out, even though it cost him time and effort. At the same time, the cost to the companies involved — the company that sold him the movies as well as Microsoft — was also quite substantial. If the customer had made the simple mistake of following the DRM's recommended procedures, he would have had to consume even more technical support from other companies or sustain an actionable, substantial monetary loss. In short, the costs of supporting DRM continue to increase, and there's no evidence whatsoever that all this nonsense is making any difference when it comes to pirated content anyway. If DRM chews into a company's slim profit margins, then even though Hollywood wants to impose DRM management on the company selling movies, no one will be able to afford DRM — least of all the companies that must cope with it.

Topics:  · intellectual+property · microsoft

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Your Personal Bill: $4.544 Billion for Infringement

The U.S. Constitution allows for copyright and patents in order to promote the free dissemination of ideas and inventions. Today's copyright laws were written for the specific purpose of protecting Disney from losing its exclusive rights on old Mickey Mouse movies; over the past decades, each time the copyrights on films from the early years were about to expire, Congress modified the laws to extend Disney's franchise.

If you take the copyright laws and court decisions seriously, and total up the "infringements" for which you have legal and possibly criminal liability, a professor at the University of Utah shows that an average person — in the course of a year of ordinary activities — may be liable for up to $4.544 billion per year in penalties.

Topics:  · government · intellectual+property

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Turning Your DVDs Off by Remote Control

A company called Kestrel Wireless is pushing a bit of scary technology: a way to exercise remote control over DVD disks — not players, disks. Kestrel, pushing the idea that 10 to 15 percent of all new-release DVDs in the US are stolen, wants to implant radio chips in each DVD. An "optical shutter" built into the disk will obscure the contents of the DVD until it's turned on at the point of sale. The idea is similar to removing tags from clothing at the cash register: stolen DVDs are useless because they aren't activated.

I find this idea particularly scary — not because it prevents theft, but because it opens the door to abuse. What can be turned on can, obviously, be turned off again. Now imagine how this technology can be used by the MPAA and other villians, using their clout over DVD equipment manufacturers. A new generation of DVD players can also have this radio technology built in. At the time of purchase, the DVD is registered to you as the owner — and if it shows up in anyone else's DVD player, the radio chip disables the DVD, rendering it useless, in order to prevent "theft" of the DVD's content. While this all remains hypothetical, it's a scenario consistent with the MPAA's constant efforts to redefine the meaning of ownership (to the MPAA's advantage).

Topics:  · business · intellectual+property

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Microsoft Vista: Unwilling to Play Movies

Can you play high-definition movies on Microsoft's new Vista operating system? Apparently not. A recent test with a DVD of high-definition content produced a comical series of error messages from Windows Vista.

For an in-depth technical analysis of the costs of Windows Vista, the best current summary is here; the author concludes, in part,

The only reason I can imagine why Microsoft would put its programmers, device vendors, third-party developers, and ultimately its customers, through this much pain is because once this copy protection is entrenched, Microsoft will completely own the distribution channel.

The essay is fascinating; the expensive hardware on your new Vista-compatible computer will spend much of its time coping with digital rights management to protect the rights of movie studios and record companies, and the slightest hardware or software incompatibility will result in immediately "fuzzing" of your audio and video.

The essay does explain one mystery: Why are new Windows Vista computers so expensive? With the price of computer hardware plummeting, I expected this new generation of computers would be less expensive and more capable. but exactly the opposite is true. The reason isn't just software bloat in Windows Vista: the computer components must be re-designed to accommodate Windows Vista requirements, such as fuzzing out video and audio when the environment is "unsafe." This re-design significantly raises costs and chews up enormous resources on the computer.

Even worse, hardware vendors also have a software problem. Hardware vendors use small, specific pieces of software to run their hardware — those pesky "drivers" that sometimes must be re-installed. After many years, hardware vendors finally managed to disaggregate software from hardware to a single driver that works across an entire product line; this makes it easier to issue upgrades and easier to resolve problems. But with Windows Vista, it's no longer possible to use a single disaggregated driver, because that might interfere with Vista's digital rights management schemes; now the hardware manufacturers have to re-create the nightmare of dozens of pieces of incompatible software.

In the book, I discuss how Windows 2000 and Windows XP attempted to aggregate the Internet browser into the operating system, a deliberate attempt to run the wheels backwards and stifle innovation. (Certainly Windows XP was otherwise pointless, which was why it was such a failure in the corporate world.) As for Windows Vista, it seems that Microsoft is far more interested in becoming a platform for digital content than they are in doing anything else, such as providing a secure computing environment without viruses or malware. Their design goals for Windows Vista is the aggregation of content into their platform; you pay the price and they reap the benefits.

Topics:  · intellectual+property · microsoft

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Doing Well by Doing Good: Brilliant Marketing by Second Life

Earlier today I was thinking of how certain companies stomp all over their biggest supporters. Apple is famous for intimidating bloggers who reveal any information about Apple products; lately it's threats against anyone who "skins" a phone to make it look like an iPhone.

I was thinking to myself how smart it would be for a company to encourage, rather than discourage, people who use discarded or neglected bits of intellectual property. If your fan base finds something of value that only they care about, and the money is insignificant, why not just let the fans work hard to spread buzz about your product?

This evening I received a link from a friend of mine to a blog comment written by the lawyers from Second Life. Someone had created a parody web site called "Get a First Life." The usual way this story goes is that the lawyers write to threaten the parody web site; since they're lawyers, and since the parodist can hardly afford a day in court, the parodist closes the site and the joke is over.

Not the lawyers for Second Life, however:

We do not believe that reasonable people would argue as to whether the website located at http://www.getafirstlife.com/ constitutes parody — it clearly is. Linden Lab is well known among its customers and in the general business community as a company with enlightened and well-informed views regarding intellectual property rights, including the fair use doctrine, open source licensing, and other principles that support creativity and self-expression. We know parody when we see it.
Moreover, Linden Lab objects to any implication that it would employ lawyers incapable of distinguishing such obvious parody. Indeed, any competent attorney is well aware that the outcome of sending a cease-and-desist letter regarding a parody is only to draw more attention to such parody, and to invite public scorn and ridicule of the humor-impaired legal counsel. Linden Lab is well-known for having strict hiring standards, including a requirement for having a sense of humor, from which our lawyers receive no exception.

The lawyers then go on to remove any doubt over the right of the parodist to modify Second Life's logo by granting him a license. This is brilliant, brilliant, brilliant, the triumph of common sense, and a move guaranteed to bring Second Life enormous good will.

Topics:  · intellectual+property · marketing · open+source

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Is the iPhone Actually eVil?

Despite all the hoopla about the iPhone, I begin to suspect that it's actually eVil. The iPhone follows the typical Apple pattern of locking other companies out and locking customers in. While that may make good business sense in the short term before people quite realize what they're getting into, in the long term it kills a product or innovation. Apple's Mac was far superior to Microsoft's junk in every way, but Microsoft was relatively more open and hence conquered the world.

Sometimes people call this business model a "walled garden," a method to create something beautiful and keep out baneful influences. I propose that we call this business model a "prison farm" instead: Yes, you can grow things on the inside; and yes, they will work and keep you alive. But guards with legal sanctions keep you locked up inside, and all the good things in life are happening someplace else. Apple is particularly adept at dressing up the prison guards in designer outfits by Gucci carrying weapons by Brooks Brothers, but they're prison guards all the same.

iPhone has (according to all reports) a wonderfully innovative interface, but at the same time iPhone locks to you to Cingular's wireless network. That's not the worst of it; the iPhone has just one approved supplier of software, namely Apple. If Apple doesn't bless the software you can't load it onto your iPhone.

Now, sometimes restrictions actually help a product, for example, the restrictions imposed by the wonderfully loony kosher cellphone providers. Apple may be able to sell their restrictions as a method to prevent viruses and malware from appearing on the cellphones; but since the "unintended" consequence of these restrictions results in a steady stream of revenue to to Apple, I admit that I'm a little suspicious. I am forcefully reminded of the amazingly overpriced ringtones that every cellphone company sells.

I fully support Imran Ali's call to create an open-source competitor to the iPhone. Imran provides a list of the most influential articles that complain about the closed iPhone, and then asks an important question: can the open-source community beat the iPhone at its own game? Of course it can; after all, the open-source Internet crushed the alternative networks, ones that were supported by huge companies with overwhelming market power. The question is will an open-source alternative be viable, and that's a question that remains, well, open.

Topics:  · apple · business · intellectual+property · telecommunications

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Imminent. Inevitable. Bankruptcy.

My friends are convinced that SCO's drawn-out patent lawsuit against IBM was funded by Microsoft as part of Microsoft's campaign to discredit Linux — "if you can't beat them, smear them." Steve Ballmer, head of Microsoft, hasn't abandoned that campaign; Microsoft's recent deal with Novell gave Ballmer another opportunity to insinuate that Linux violates Microsoft's patents. Classical FUD from the masters of FUD at Microsoft, and a measure of Microsoft's continued desperation as it tries to prevent continued disaggregation and stifle further innovation in the computer industry.

But it seems that SCO's lawsuit, and SCO itself, may be drawing to a close. Novell's filings against SCO claim that much of SCO's income is actually money that belongs to Novell, and

For SCO, bankruptcy is inevitable; it characterizes its assets as merely those "remaining" and does not rebut Novell's arguments that its bankruptcy is imminent.

As Groklaw states, the key words are "Imminent. Inevitable. Bankruptcy."

One of the lessons here is Microsoft's apparent treachery. Microsoft infused cash into SCO, which used that cash to fund a lawsuit against IBM and Linux. Now Microsoft is funding Novell in a different anti-Linux tactic while Novell attacks SCO. Will Novell fare any better when it suits Microsoft's fancy to try a different attack against Linux?

Topics:  · business · ethics · intellectual+property

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Is the Next Generation of DVD Players Doomed?

Let's say that every time you wanted to take a trip in your new Ford or Toyota automobile, you had to contact the manufacturer for permission: You would go to a web site and enter your starting point, destination, names of all passengers, and purpose for the trip. Certain trips would require a special, extra fee to the manufacturer if it decided that your trip wasn't on the list of "standard" uses for your car, or even if you gave too many rides to a neighbor who didn't have his own car. Oh, and good luck if the Internet was down, because you wouldn't be able to start your car — the manufacturers have to send an unlock code before each and every trip.

Not very attractive, right? In fact, if all new cars were made that way, you'd do everything you could to hold onto your present-day car and keep it running as long as possbile, and pray that the manufacturers regained some sanity before you were stuck with one of those new automobiles.

Sound ridiculous? Unfortunately, it describes exactly why I will hold onto my current DVD player as long as possible. Here's how the next generation of DVD players [Site requires free registration], HD-DVD and Blu-ray, will work:

If a consumer wants to make a copy of copyrighted content in his HD-DVD recorder, he first needs to hook his recorder to a network via Ethernet. Then, he goes to a Web site made available by a content owner, where he finds out how much it costs to make a copy in a certain resolution, such as high or standard definition. The consumer also has to inform the content owner of a destination medium (a portable media player, for example) where the copied content will eventually be played back.

I've written before about the incredible concepts behind Blu-ray; for example, the manufacturer can disable your player by remote control if they think you're using the player in ways they deem inappropriate. But I see the insanity isn't confined to Blu-ray, and that HD-DVD also contains these amazing "digital rights management" schemes.

The large "content providers" — the handful of music companies and movie studios that control the vast majority of entertainment in the US and worldwide — continue their campaign to redefine ownership. Digital rights management disaggregates ownership of "content" from the physical ownership of the data: I might own a DVD and the digital data burned onto it, but without a DVD player that has the correct cryptographic codes, I can't play the DVD and it's worthless. The large content providers are attempting to use that disaggregation to seize ownership and centralize it; they prefer that I purchase the DVD and then pay rent afterwards as well, a business model that brings them a steady revenue stream. Fortunately, current-generation DVD players won't go away soon, and the confusion in the marketplace between HD-DVD and Blu-ray will open up competition, and I can hope that competition will lead to more sane policies — ones that give me ownership of the content I purchase.

Topics:  · intellectual+property · standards · technology

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Rethinking the Press Release

Companies go to great lengths to churn out press releases to generate interest in their products. At the same time reporters routinely ignore press releases; if they want to publish decent articles they have to write them up themselves. As an alternative to the current system, Tom Foremski proposes that companies disaggregate their press releases into useful components:

Deconstruct the press release into special sections and tag the information so that as a publisher, I can pre-assemble some of the news story and make the information useful.

He then goes on to suggest how to break apart the press release and — most importantly — that the separate pieces of information be "tagged" so that they will be easy to find and re-assemble.

I think this is a fascinating and useful idea, and is very similar to the current US Securities and Exchange Commission proposals to report financial information in a standard format. Even if editors were to ultimately find this system unusable for their own purposes, it's entirely possible that financial analysts could use press reports in standard format to automatically alert investors to important news stories.

Topics:  · concepts · culture · intellectual+property

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Buying and Selling Patents

The first patent auction is over, but I'd like to take a moment to explain why it's the wave of the future.

The recent court case, which saw a "patent troll" nearly shut down Blackberry service in the US, is taken as evidence by many — including myself — that the patent system is badly in need of reform. However, some of the reforms are an attempt to reverse the disaggregation of patents from manufacturing. That is, some people want to require that inventors actually manufacture something in order to obtain patent protection. They believe such a requirement would prevent "patent trolls" who make broad claims of protection but have never proved the worth of their inventions in practice from mugging companies that actually produce products and services.

As the recent patent auction shows, patents are completely disaggregated from the act of manufacturing, and any attempt to run the wheels backwards and reverse this disaggregation won't turn out well.

Topics:  · intellectual+property

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