Broken Down on the Information Superhighway

Here are some facts to get us started.

• In August, 2007 AT&T performed a bit of surgery to a Lollapalooza webcast. Live fans got to see Pearl Jam start their song “Daughter.” It flowed and merged during the performance and became Pink Floyd’s “The Wall.” Eddie Vedder replaced some of the lyrics with “George Bush, leave this world alone/George Bush, find yourself another home. “ AT&T edited it out.

• At Macworld 08 in January, Steve Jobs announced downloadable movie rentals through iTunes. Most movies are between 1 and 1.5 gigabyte in size. Since that time, they’ve included much larger high-definition movies through the Apple TV set-top boxes. These travel to customers, of course, over the Internet.

• In April, 2008, an AT&T vice president told a UK group that, without investment, the Internet will no longer be able to cope with the data load after 2010. "The surge in online content is at the center of the most dramatic changes affecting the Internet today," he said. "In three years' time, twenty typical households will generate more traffic than the entire Internet today." (The sky is falling.)

• According to Comscore, Americans watched 12 billion videos online in May 2008. About 35% of that 12 billion were from Google properties such as YouTube.

• Also in May, Verizon Wireless, having already admitted to a secret 5 GB cap in their “unlimited” wireless data plan, announced their new plan for existing subscribers (those having a plan prior to March 3, 2008). Succinctly, it said that users exceeding 5 GB in one billing period would have their download speed throttled to 200 kbs for the next thirty days. We don’t need you: “. . . if you are unhappy with these changes, you may cancel your BroadbandAccess service within 60 days of receiving this notice with no early-termination fee. “ This was after “I got the letter” and “Verizon terminated my service” became popular topics at evdoforums.com.

• In June 2008 Time Warner Cable started testing metered Internet access in Beaumont, TX. I am glad I don’t live there – the rates are 40 GB for $55 and $1 for each additional gigabyte beyond the cap.

• On October 1, 2008 Comcast announced a 250-GB data cap. (FAQ: What is excessive use?)

• A decade ago, 75% of all Internet traffic flowed through the United States. Now only about 25% does. Since the passage of the Patriot Act companies outside the United States have become reluctant to store private client or company information in the US.

• There are about 237 million Internet users in the US. This represents approximately 71% market penetration.

We have indeed arrived at some interesting times. On one side are the Internet carriers and ISPs. The biggest carriers also tend to be ISPs. Time Warner Cable, AT&T, and Comcast are examples. They want to keep things balanced and control the size of their own pipes. They don’t mind your blogging or watching YouTube (at least, not much), but they want to be the sole provider of your movies. The thought of users actually downloading their huge entertainment through their pipes has these big boys concerned. This keeps lawyers employed. Caps and metering may be only their opening salvoes.

On the other side are the content owners and purveyors – the studios, the online radio stations, iTunes, Amazon Video on Demand (nee “unBox”), Movielink, and all those mischievous pornographers. Although they are conflicted and deathly afraid of piracy, they also want you to have unfettered access to the content that they sell you – downloadable tunes (“tracks”), temporary music (“streaming video”) and movies. The movie studios want you to rent your movies, preferably at the full purchase price, if they could have their way. Rented movies disappear from your PC or set-top box after you watch them, sort of like the recording tapes in Mission Impossible.

Of course, this is just the public face of the flap between two not disinterested parties. While we’ve been watching these antics, something far more potentially dangerous has been going on.

Next: ACTA, ACTA Origins, and US Border Searches

It’s called the “anti-counterfeiting trade agreement” or ACTA.

It ostensibly arose (Ars Technica’s version) from a desire of the European Union to move forward in creating agreements with the major trading partners concerning a wide variety of goods and services in danger of being counterfeited. This could include, for example, fake pharmaceuticals and car parts, uncertified airplane parts (it’s possible that bogus airplane parts may have been involved in the recent crash of a Russian jet), substituted commercial chemicals, imitation infant formula, faux designer goods, and counterfeit DVDs and CDs.

Another version (the Wikileaks edition) says that the ACTA push was actually launched in October, 2007 by US Ambassador Susan Schwab in a meeting with interested intellectual rights holders from several industries and five members of Congress. These were Rep. Mary Bono (R-CA), Rep. Horward Berman (D-CA), Rep. Bob Goodlatte (R_VA), Rep. Adam Schiff (D-CA), and Rep. Marsha Blackburn (R-TN).

Reporting on this, Wikileaks said, “Who is really behind ACTA? Follow the money.”

Rep. Howard Berman (D-CA)

• Top four campaign contributors for 2006: Time Warner ($21,000), News Corp ($15,000), Sony Corp. of America ($14,000), and Walt Disney Co. ($13,550).

• Top two Industries: TV/Movies/Music $181,050, Lawyers/Law Firms $114,200.

So, that’s two views of how the ACTA came to be. Signers-on for ACTA now include the EU, US, Japan, Korea, Mexico, and New Zealand, among others.

Here’s an interesting excerpt from their FAQ page.

Q: Is this really about ganging up on China and other countries that are not part of the group?

A: No. ACTA is not intended to isolate countries or point the finger at their enforcement efforts. The countries involved in this initiative share a particular vision of a path to stronger enforcement to deal with the challenges of piracy and counterfeiting today. This is an inclusive vision which we hope that more countries will embrace when they feel the time is right.

According to ACTA, piracy and counterfeiting today pose “an ever-increasing threat to the sustainable development of the world economy.” They estimate the international trade of counterfeited objects to equal $200 billion – a number higher, they point out, than the Gross Domestic Product of 150 countries and 2% of all world trade.

A draft of the agreement has yet to be published and may not actually exist yet.

The ACTA is to be “locked” when finished. In other words, after the existing members, the more powerful countries that own most of the content and physical industries affected by counterfeiting and piracy, get through thrashing out the text, smaller countries won’t be able to alter the agreement. It’ll be “take it or leave it.”

As IP Justice puts it: “After the multi-lateral treaty’s scope and priorities are negotiated by the few countries invited to participate in the early discussions, ACTA’s text will be ‘locked’ and other countries who are later ‘invited’ to sign-on to the pact will not be able to re-negotiate its terms. It is claimed that signing-on to the trade agreement will be ‘voluntary,’ but few countries will have the muscle to refuse an ‘invitation’ to join, once the rules have been set by the select few conducting the negotiations.”

Some provisions of ACTA are leaking out. RTI.ie, an Irish website, said in May 2008: “. . . the treaty suggests that customs officers should be given the right to search laptops and media players for pirated material. Such officers would be able to confiscate and destroy anything they believe to be pirated, fine the owner, and confiscate the equipment.”

US policy, by the way, has already given US Customs the power to search and seize without a warrant and without any probable cause any laptop coming in from an international flight. After a US Ninth Circuit confirmation of the legality of these unwarranted searches, US Customs decided that they could extend this logic to other personal devices that can contain data, including smart phones and MP3 players. They are not looking for your backed-up DVD-R of “Enter the Dragon” or bootleg MP3 of “I Kissed a Girl” yet, but ACTA could possibly place them in this role, too.

Rep. Loretta Sanchez (D-CA) has introduced into the House a bill that will add some common-sense provisions to these border searches. If enacted, it will say hands-off to information involving attorney-client, physician-patient, and commercial communications that contain corporate trade secrets. It’s sad that a new rule is needed at all, but there’s also a provision that any border agent seizing a laptop must give the individual a receipt for it.

Next: ACTA Leaks, RIAA Wishlist, Pro-IP Act

Then in June, 2008, a set of sample discussion points was leaked. Though not constituting a draft, some of the discussion points were draconian and scary. (Somebody involved in ACTA is apparently interested in letting a little sunshine in, or a little of the darkness out.) Said the Sydney Morning Herald, “It proposes a governing body for copyright protection that would operate outside organizations such as the World Trade Organization (WTO) and the UN. In short, it proposes a global police force, answerable to no one, with intrusive powers that vastly exceed those currently available to adherents of the concept of intellectual property.”

The members of ACTA have not sought public input, but they have asked for suggestions and positions from industry. The Recording Institute of America (RIAA) certainly weighed in. They sent in their wish list back in March, 2008.

Some of their wish items were:

• Permit law enforcement authorities, both at the border and internally, to seize clearly infringing copyright and trademark materials and to seize and/or place under seal equipment or materials suspected of being used to produce such infringing copies without the need for a complaint from the right holder, and without regard to whether protected materials have been recorded or otherwise registered with border authorities.

• Provide that goods determined to be infringing are subject to forfeiture and destruction regardless of whether any action for infringement is initiated, whether civil, administrative or criminal and without any compensation of any kind to the defendant, and regardless of whether there has been any finding of liability on the part of any person.

• Compel manufacturers of optical discs in their territory to maintain complete and accurate records to enable right holders and public authorities to trace the person or entity that ordered the infringing discs.

And more in a similar vein.

So there we have secret meetings, secret participants, and a secret agenda that slashes through international borders and is more powerful than individual governments or international law enforcement. Big content is invited to contribute, but the end-users, the consumers of the content that actually pay for what the participants provide, is to be kept in the dark until these new rules, like the Hounds of Hell, are released upon the unsuspecting populace.

It gets better. The Electronic Frontier Foundation and Public Knowledge have sued to force ACTA to open their records and expose their agreements. Since the whole thing may have started with an ambassador and five congressmen, all ultimately civil employees, the EFF’s position seems very reasonable.

Meanwhile, in Congress, we have the good old boys and their big content cronies trying to enact some of what ACTA wants. Called the “Enforcement of Intellectual Property Rights Act,” it has been approved by the House Judiciary Committee. According to Ars Technica, one provision of the act gives the Justice Department “authority to pursue civil suits against IP [intellectual property] infringers, awarding any damages won to the patent, copyright, or trademark holders.” In other words, if this act passes, responsibility for prosecuting a case of infringement passes from the RIAA to the federal judiciary. This is being dumped on the American tax payer.

Could the RIAA and MPAA (Motion Picture Association of America) possibly be any more pleased?

Update: American tax payers won't be paying for this after all. The name of the bill is now "Pro-IP" and the provision to have the Justice Department represent big content and patent trolls was dropped.

Next: What Consumers Want, Information Wants To Be Free, What A Song is Worth, and Summing It All Up

And just a tidbit . . . Back in the spring, another ACTA – the America’s Carrier Telecommunications Association – actually lobbied the FCC to ban Internet telephony. That ultimately failed, but isn’t the fact that they were even willing to try indicative that they are out of touch with what consumers want?

What do consumers want? It depends on which generation the consumer is part of. Young people think that content was made to be shared. They know that it comes from somewhere because they have seen the bands in the videos on YouTube. Although they may get some music from iTunes, they don’t buy CDs. They don’t read Rolling Stone or TV Guide. They rely on their friends, not the radio or television, to tell them what music is good. They freely trade what they have with their friends, both on the Internet and on a more personal level. They have a concept of “flow.” Music and movies, advertisements and information are flowing all around them, a keystroke or less away, competing for their attention and always easily accessible.

This is anathema to big content.

And that’s why I think that ACTA, and the RIAA’s and MPAA’s efforts against casual piracy will ultimately fail.

Information wants to be free, and the incoming generation both demands and expects it. Members of that generation, too, are the content creators as well as the consumers of tomorrow, and some of them are even now in those independent young bands that are bypassing the studios to “up” their music on iTunes, which has become cheaper than ever.

Old maps used to say, “Here be dragons.” One can look at the movie industry and think, “Here be dinosaurs.” At least the music industry is finally figuring out that customers don’t want digitals rights management (DRM). That’s why MP3 sales are actually zooming now. How bad and ugly will it get before the more entrenched motion picture industry discovers the same thing?

"Direct to DVD" is becoming "Direct to Download" already. No theater needed. (One wonders how long the theaters will be able to hang on as the recession deepens and inflation sets in.)

iTunes taught us all that owning a song is worth ninety-nine cents. The movie studios need to get with the program. Renting and watching a movie on an iPhone or PC or TV should also cost $0.99. It costs virtually nothing for big content to distribute the media, yet they want the same profit level that they used to get in a DVD sale. From the end-user's perspective, he's paying for only temporary use of the media and there's no physical media at all. When a purchase is made from iTunes, one gets a file that is a song that has a name that one can listen to, over and over if so desired. When one "rents" a downloadable movie, nothing is owned and nothing is left.The downloads don't come with the "DVD Extras" like "The Making of" and director's commentary. A downloaded movie rental is a thing of reduced value, yet the studios want users to pay for the equivalent of a brick and mortar video store rental. This is absurd.The studios should be looking for the equilibrium point and pricing their rental downloads to appeal to a greater number of viewers that will equal or exceed the profit from a DVD sale.

So while detecting and preventing physical counterfeits is a very worthwhile and needful cause, especially in the area of health care products and airplane parts, and while we're in for a bumpy ride while the pipe providers and the content pushers snark it out, attempting to appease the dinosaurs is doomed to fail. Their business is apparently changing faster than they can comprehend.

Remember that incoming generation. If content isn’t free, it had better be cheap and easy to obtain and use.

Or they'll find it elsewhere.

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