Hello World

Here is a great article written by Microsoft copy-protection engineers which considers the "darknet"--the illegal intellectual property distribution network that used to be personal associates trading cassettes and is now characterized by peer-to-peer file-sharing. The article considers current and proposed methods of thwarting or minimizing illegal activity on the darknet and basically concludes "we're fucked." This is my favorite paragraph:

There is evidence that the darknet will continue to exist and provide low cost, high-quality service to a large group of consumers. This means that in many markets, the darknet will be a competitor to legal commerce. From the point of view of economic theory, this has profound implications for business strategy: for example, increased security (e.g. stronger DRM systems) may act as a disincentive to legal commerce. Consider an MP3 file sold on a web site: this costs money, but the purchased object is as useful as a version acquired from the darknet. However, a securely DRM-wrapped song is strictly less attractive: although the industry is striving for flexible licensing rules, customers will be restricted in their actions if the system is to provide meaningful security. This means that a vendor will probably make more money by selling unprotected objects than protected objects. In short, if you are competing with the darknet, you must compete on the darknet’s own terms: that is convenience and low cost rather than additional security.

AMEN. Note that this was written 2 years ago and we're still stuck with obnoxious copy-protection that doesn't work and makes life more annoying for legitimate users. I know big corporations are slow to adjust to changing conditions, but seriously. If somebody had an online music store that sold unrestricted near-CD-quality mp3s I would be on that in a second, even if it were a little more expensive than iTunes (which I don't use, because the files are lower in audio quality than CDs and because the only mp3 player I can use them with is an iPod). And I'm a SOPHISTICATED consumer who realistically could download any song I want for free¹. Imagine how happy grandma would be if she could just download a song and use it however she wanted, rather than get stuck with error messages because she can't figure out DRM.

I think the salient point of the article as well as this posting is that the best way to lose legal paying customers is to restrict their rights (see: DRM, CSS, watermarking, fingerprinting, gene-mapping) and the best way to gain them is to provide a service of equal convenience and value to that of the darknets at a price that makes sense. No more $16 CDs, no more movie downloads that only work on one computer within 24 hours--no more crazy rules or prices that drive consumers into the warm and comforting arms of illegal file-sharing.

1. Though I don't, actually, download any song I want. Instead, I buy CDs and rip them to my hard drive, which is so STUPIDLY INEFFICIENT AND ARCHAIC IT MAKES ME SICK. I mean, I was doing this in 1997!

Engadget scores an interview with Jack Valenti, the lame duck head of the Motion Picture Association of America. He seems to be either senile or obsessed with getting his talking points out there:

Some have suggested that tech companies need to reengineer the PC to make it a ‘trusted appliance’ for watching copyrighted entertainment. Do you share that view?

Right now, I don’t know exactly. But in time, the technology innovation is moving with such celerity that Gordon Moore’s old deal, that every 18 months a chip doubles in capacity and power, is being brought down to about 12 or 8 months. When I look at what Caltech and Internet2 are doing, it’s incredible.

He also seems to have no idea how copyright works:

Do consumers have a fair use right to remix a few seconds of a Hollywood movie into a home movie project?

There is no fair use to take something that doesn’t belong to you.
That’s not fair use. If you’re a professor in a classroom, you show ‘Singing in the Rain’ to your class. You can fast forward it, and there’s no performance fee for that. That’s fair use. Now, fair use is not in the law. People are taking fair use and changing it to unfair use and claiming that it’s fair use.

Uh... what? Maybe I'm just a complete and utter moron, but I thought the whole point of fair use was that you don't have to own a piece of intellectual property to use it (assuming you meet various conditions that are encapsulated in the phrase "fair use"). Wasn't this guy the head of the MPAA for 38 years? Shouldn't he know this stuff?

Might I just be missing something? Someone edify me.

So, it turns out that file-sharing doesn't hurt music sales. Yes, that's right, the worthless RIAA is full of excrement. Let's just make this explicit: "'From a statistical point of view, what this means is that there is no effect between downloading and sales,' said Oberholzer-Gee." But wait, it gets even better: "they concluded that file sharing actually increases CD sales for hot albums that sell more than 600,000 copies." Although this is a direct contradiction of the assertion that "there is no effect between downloading and sales," it's pretty damned easy to make the case that it in fact means that there is a POSITIVE correlation between downloading and sales. Well, kind of. That is only true for albums that are popular; low-selling "niche" albums suffer a "small negative effect" as a result of jerks like you frequenting peer-to-peer file-sharing services. So I guess that's not awesome, but really how many niche artists do you think expect to make a living off their poorly-selling albums, anyway? If you really like an unpopular band, just buy a t-shirt and a concert ticket.

Eric Garland, chief executive of Big Champagne, an Atlanta company that tracks file-sharing activity, said the findings match what his company has observed about the effect of file sharing on music sales. Although the practice cannibalizes some sales, it may promote others by serving as a marketing tool, Garland said.

Uh, no kidding, guy. Holy smokes, is it really possible that it has taken 5 years for anybody to figure out that people who listen to more music are likely to buy more music? Isn't that the whole reason that radio stations don't have to pay royalties on the music they play?
Anyway, later on in the article the RIAA asserts that the study is contradicted by other studies, and this is about where I stopped really reading so maybe the story concludes with a tender description of an infant's first steps or perhaps a nice sonnet. But I'm pretty sure I got the main point, which is:

File-Sharing is Good for America!