Entertainment & Media, Technology
The newspaper industry in the US is suffering from enormous losses in revenue. Fewer reporters are employed by these papers, and a greater reliance on content from wire services is more commonplace. This means that newspapers are no longer focusing on investigative reporting on a local level as they once did. Sports reporting is one of the rare exceptions in which newspapers continue to invest because of intense local interest in such news. Many daily newspapers, most recently The Cleveland Plain Dealer, have cut back on the number of days they are offering their newspapers in print format. The economic pressures are hitting every major newspaper in America.
How did this happen? While it did not occur overnight, the Internet and other alternative sources of news have caused a sea change in the industry. Newspapers have continued to suffer reduced readership and losses, largely as a result of a failure to adapt to the challenges posed by the Internet. Daily newspapers, which have always relied on a revenue stream comprised of subscriptions and advertising, have seen substantial losses in both areas. Particularly acute have been the losses in revenue from classified advertising (which has been significantly impacted by sites such as Craig’s List and eBay) and print subscriptions (which have been impacted by readily available and constantly updated news on the Internet).
Some newspapers have reacted by making their websites and special digital content not in the print versions of their papers accessible only to those who pay a subscription fee. There are three ways of doing so that are in common practice. The first is a “hard paywall” that restricts all access to all parts of a site unless a person has a subscription. This is rarely done. A more common form of the hard paywall allows access only to the front page or a select few articles with access to other content limited to subscribers. The third and most commonly implemented way is the “metered paywall” that allows a website visitor to access a limited number of articles for free each month, with a subscription required for access beyond that set limit.
Adopting a subscription model, however, can be problematic. Advertising rates for websites are based on the number of visitors to a website, calculated on a CPM–or cost per thousand impressions –basis. Impressions are the number of times an advertisement is served (i.e., appears) on a website. When newspapers charge for access to the electronic versions of their publications, they may generate revenue from subscriptions, but they also tend to lose site visitors, especially when a hard paywall is implemented. As a result, the advertising rates that they can charge to advertisers on the site drop as a result of reduced site traffic. Newspapers are struggling with this delicate balancing act as they seek to create new revenue streams and to reinvent themselves as format-neutral content providers.
How bad are things in the industry right now? The New York Times Company, owner of both The New York Times and The Boston Globe recently sold the Globe to hedge fund manager and Boston Red Sox owner, John Henry, for the paltry sum of $70 million. They paid $1.1 billion for the paper 20 years ago.
This week, it was announced that Jeff Bezos, the billionaire founder of Amazon.com, agreed to purchase The Washington Post newspaper, the flagship publication of The Washington Post Company, for the sum of $250 million. The Graham family, which had owned the newspaper for generations, had seen enough losses and felt it was time to sell. It is ironic that the founder of Amazon, which has had a leading role in the creation of and advocacy for electronic books and publications, will now try to improve the financial fortunes of The Washington Post.
Other major papers are up for sale. Several are owned by The Tribune Company, which recently emerged from bankruptcy protection. While The Tribune Company has stated that it wants to retain its valuable television station properties, it has indicated that it wants to sell its newspapers. Among them are some of the largest daily newspapers in America: The Los Angeles Times, The Chicago Tribune and The Baltimore Sun. Given the recent sale prices for The Washington Post and especially The Boston Globe, the sale prices of the Tribune papers are likely to be quite low.
More and more, major American newspapers are being sold to “non-newspaper” people. Only time will tell what impact all of this will have on daily newspapers and on journalism as we know it.
Articles of Interest, Music, Technology
This blawg often deals with the intersection of technology and the arts. Here is an interesting article that discusses how recent graduates with technology degrees are having a tougher time finding a job than their peers in the arts. I’m not sure this is so much a positive statement about the state of the job market for arts majors as it is a statement about the tough market for tech grads.
http://m.usatoday.com/article/money/2595669
Entertainment & Media, Technology
In a prior blawg post, I described how Netflix’s decision to produce and stream original content on an on-demand basis (for the entire series) could prove to be a very disruptive force in the traditional television entertainment world. Netflix, which had been the leading DVD-by-mail rental service, saw its revenues falling over some questionable pricing policy changes. Its decision to invest heavily in original programming has allowed Netflix to reinvent itself into a streaming content giant (with 29 million current U.S. subscribers). A key part of that strategy involved investing in quality (and expensive) original content—far exceeding anything previously produced solely for the web.
Netflix’s investment seems to be paying off not only for its bottom line, but also for its reputation as a serious creative force. House of Cards, Netflix’s first foray into original programming, just received an Emmy nomination for Best Drama Series, and its two leads, Kevin Spacey and Robin Wright, each received Best Actor nominations. It marks the first time that a show not aired either on traditional broadcast or cable networks has been nominated in the top Emmy categories.
Shows distributed over the Internet were first made eligible for TV’s top honors under a change to the Emmy voting rules that became effective in 2008. Interestingly, of all the other competitors in the Best Drama Series category– Breaking Bad, Downton Abbey, Game of Thrones, Homeland and Mad Men—only Downton Abbey airs on a broadcast network (and it airs on PBS, not one of the traditional “big four” of CBS, NBC, ABC and Fox). The other shows are cable series and, of course, House of Cards is available only streamed to Netflix subscribers.
This certainly is an indication that, not only are viewers embracing these non-traditional networks more than ever, but actors and producers see these alternatives to the networks as a better vehicle for their artistic visions. The Emmy nods now make it clear that the Academy of Television Arts & Sciences (the presenter of the awards) sees the changing entertainment landscape as well. On the heels of its success with House of Cards, Netflix won the exclusive rights to stream an entire new season of the cult hit Arrested Development and, within the past couple of weeks, it has made available its second original series, Orange Is The New Black. Obviously, Netflix is betting on a future in which original programming will play a key, if not exclusive, role.
Will the traditional television networks once again be able to produce shows that can compete with the quality found on cable and now on-demand? That question, of course, must factor in both economic and creative considerations. Time may be running out for the Big Four.
Entertainment & Media, Technology
From time to time, Gurwin’s Keyboard will feature guest bloggers. Today’s post is by Gabe Gurwin.
“Console Wars” is usually a term I consider to be slightly exaggerated. Over the last twenty years, we’ve routinely seen two or three companies produce video game systems to compete against one another, but not only has advertising remained relatively civil (“Sega does what Ninten-don’t” is about as vicious as it got), the phrase seems to always rear its ugly head at the beginning of a new generation. For once, however, it’s safe to say that we are indeed in a “console war.”
This current generation has been somewhat of an anomaly for video game systems. Not only did it go on twice as long as the generation prior, but the top-selling system, the Nintendo Wii, fell into obscurity after only a few years. This left Microsoft’s Xbox 360 and Sony’s PlayStation 3 to duke it out, and although the systems emphasized different features—such as Sony’s support for independent developers—the choice in console for consumers largely came down to game preference. Xbox owners were largely attracted to exclusives like Halo and Forza, as well as the vastly superior Xbox Live service, while PlayStation owners had a much larger selection of exclusive games to choose from. However, this generation seems to be taking a much different turn. While there are some big exclusives—such as Sony’s Killzone and Microsoft’s Dead Rising 3—the games themselves are largely irrelevant to the consumers’ choice in console.
Instead, focus has largely been put on the business practices of said consoles’ manufacturers. Rumors began swirling months ago that Microsoft would be implement consumer-unfriendly practices such as the requirement of an internet connection to play games and the implementation of used games restrictions with its Xbox One console. Although Microsoft did clarify that these policies are not quite as strict as some had predicted, Sony’s confirmation that the PlayStation 4 would not feature any DRM (digital rights management) or internet requirements resulted in an explosion of support for the company. (DRM is a technology that allows a software/game vendor to prevent copying or sharing of games and US Copyright law prevents such technology from being subverted.) Amazon has already stopped taking pre-orders for the system’s “launch day” version, while Microsoft’s Xbox One is still available to purchase online. In addition, while Microsoft’s console is priced at $500—due in no small part to the inclusion of a Kinect sensor in every box—the PlayStation is a full $100 cheaper.
Of course, there’s also Nintendo, whose Wii U console has been selling so poorly CEO Satoru Iwata has once again apologized for its poor performance. After a lackluster showing at E3 (the annual Electronic Entertainment Expo) that revealed most of its announced games would be released in 2014, the system will be largely leaning on the success of Super Mario 3D World to boost sales this holiday season.
All three consoles have their perks, but if this E3 is anything to go by, consoles will no longer succeed entirely because of games and exclusive content. Instead, they will rely on a positive relationship with the consumer. So far, Sony is the only company that has done enough to achieve this.
Gabe Gurwin is a video game industry journalist and blogger. He is an Editor of Invisible Gamer (www.invisiblegamer.net) and Video Game Editor of Ohio University’s Tech Heads Blog (techheads.me). You can follow him on Twitter @GamingAngelGabe.
Entertainment & Media, Technology
The Contestants: Viacom International vs. YouTube and Google
Background
In 2007, Viacom, the global mass media company, filed a lawsuit in U.S. District Court in New York against YouTube and its then-new owner, Google, Inc., alleging that YouTube had engaged in copyright infringement by allowing its users to upload and view thousands of videos owned by Viacom without its permission. Since the lawsuit was filed, YouTube has continued to grow and attract enormous numbers of users. In fact, YouTube is now included in Billboard magazine’s charts, as it has become a preferred destination for music and music videos. The case, Viacom International, Inc. v. YouTube, Inc., which could have a significant impact on YouTube and other similar services, is still going strong after six years of litigation. Like a great title prize fight, there have been victories and setbacks for both sides during the case. So, will this titanic clash between the two media giants be resolved any time soon?
Round One—The Complaint
In its Complaint filed in 2007, Viacom claimed that YouTube had infringed on its copyrights by performing, displaying, and reproducing Viacom’s copyrighted works. It characterized this as “brazen” and “massive” copyright infringement. The lawsuit, which sought $1 billion in damages, alleged that over 150,000 unauthorized clips of Viacom’s programming, such as SpongeBob SquarePants and The Daily Show, had been made available on YouTube, and that these clips had collectively been viewed more than 1.5 billion times. Most significantly, the lawsuit alleged that YouTube engaged in, promoted and induced the infringement, and that they had deliberately built up a library of infringing works in order to increase YouTube’s site traffic (and, consequently, its advertising revenue).
Even though YouTube implemented a “Content ID filtering system” to automatically identify and prevent uploading of certain copyrighted materials in 2008, Viacom did not agree to dismiss the lawsuit (although it is not seeking damages for infringements after that date). It still seeks a judgment that YouTube/Google are liable for copyright infringement.
At the core of the case is the extent to which Section 512 of the Copyright Act, also known as the Digital Millennium Copyright Act (“DMCA”), particularly its “Safe Harbor” provision for internet service providers, provides YouTube (and other content hosts) with immunity from copyright infringement liability for the infringing posts of its users. DMCA, which became effective in October 1998, set up a system whereby an internet service provider (“ISP”) would not be liable for copyright infringement for materials posted by a third party on the ISP’s site merely because it provided the “conduit” for a user to post infringing material, as long as a mechanism was put into place to enable a party which claims that its content has been posted unlawfully to demand that it be taken down. The immunity provisions of DMCA do not apply when an ISP posts materials itself.
YouTube, of course, claimed that DMCA shields it from immunity, as it did not “post” any of Viacom’s content to the YouTube site, but merely provided the platform on which its users posted (and continue to post) such content. Viacom claimed that YouTube encouraged and, in any event, clearly was aware that such infringing content was being posted on a massive scale by its users and, as such, YouTube should not be able to cloak itself with the immunity bestowed by DMCA.
Round Two—The First District Court Ruling
Judge Louis Stanton, the U.S. District Court judge presiding in the case, granted Google/YouTube’s motion for summary judgment seeking dismissal of the case in 2010. For you non-lawyers, a “summary judgment” essentially says that, viewing the facts most favorably to the party not seeking the summary judgment, such facts would not amount to a violation of the law. Judge Stanton agreed that DMCA’s immunity provisions shielded YouTube from liability.
Round Three—The First Appeal
Viacom appealed that decision to the United States Court of Appeals for the Second Circuit. In 2012, the Second Circuit overturned in part the lower court’s summary judgment ruling and ordered that the lower court rehear certain aspects of the case. Last month, the Judge Stanton again granted summary judgment in favor of YouTube and once again that decision has been appealed.
In the original 2010 summary judgment ruling, Judge Stanton agreed that YouTube undeniably had general knowledge that some copyrighted material had been uploaded by its users. However, the court felt that YouTube did not know which clips had been uploaded with permission and which had not. Judge Stanton also said in his ruling that mandating video-sharing sites to proactively police every uploaded video “would contravene the structure and operation of the DMCA.” As evidence that the notification and takedown procedures specified by DMCA were effective, Judge Stanton noted that YouTube had successfully addressed a mass take-down notice issued by Viacom in 2007. Significantly, Judge Stanton felt that YouTube’s actions were not comparable to those of other Internet-based, media-sharing companies, such as Grokster, that had previously been found guilty of indirect copyright infringement.
In the original appeal to the Second Circuit following Judge Stanton’s grant of summary judgment the first time, Viacom (by then joined by other plaintiffs in the case, including the English Premier Soccer League), focused on a series of internal emails among YouTube employees who made clear in those e-mails that they were aware of infringement, including specific instances. The District Court previously had indicated that such actual knowledge could be considered to be sufficient to disqualify YouTube from DMCA’s immunity.
The Second Circuit, finding merit in those arguments, reversed Judge Stanton’s grant of summary judgment, and held that a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website and that the right and ability to control infringing activity need not require knowledge of specific infringements. While the Second Circuit overturned the lower court’s granting of summary judgment in favor of Viacom, its ruling ordering the case back to the lower court was limited. The court did reject Viacom’s argument that YouTube automatically would not be entitled to the immunity simply because YouTube’s software allowing users to upload videos has certain functionality (specifically transcoding of content, playback of content and related-video thumbnails). The Second Circuit felt, however, that a fourth function of YouTube’s software, syndication (that would allow others to share and generate revenue from sharing videos), should be examined more closely by the lower court.
Round Four—The Second District Court Ruling
The latest development in the case occurred on April 18, 2013, when Judge Stanton, after reconsidering the case after it was sent back down to him by the Second Circuit, issued yet another order granting summary judgment in favor of YouTube. This time, Judge Stanton’s decision addressed four issues: 1) Whether YouTube had knowledge or awareness of any specific infringements; 2) Whether YouTube willfully “blinded” itself to the infringements; 3) Whether YouTube had the “right and ability to control” infringing activity on its site by its users; and 4) Whether any clips were syndicated.
In his latest ruling, Judge Stanton ruled in favor of YouTube on all four issues, finding that YouTube had no actual knowledge of any specific instance of infringement of Viacom’s works, and therefore could not have “willfully blinded itself” to the infringements. Further, the court found that YouTube did not have the “right and ability to control” infringing activity because “there is no evidence that YouTube induced its users to submit infringing videos, provided users with detailed instructions about what content to upload or edited their content, prescreened submissions for quality, steered users to infringing videos, or otherwise interacted with infringing users to a point where it might be said to have participated in their activity.”
Round Five—Viacom’s Latest Appeal
As might have been predicted, Viacom and the other plaintiffs, once again, have appealed the lower court’s latest decision and it appears that the fight will continue into the later rounds. I don’t expect either side to throw in the towel on this one any time soon.
Law, Music, Technology
We’ve all been there. You had to have the latest release by Mariah Carey (you may begin thinking up an excuse for that), and you went on Amazon and purchased the CD. After listening to it a couple of times (and experiencing a case of buyer’s remorse), you decide that you want to sell the CD. Under the Copyright Act’s First Sale Doctrine (which I discussed in another context in a prior blawg post ), it is perfectly legal to do so. You may sell it, rent it or give it away and you owe the copyright owner nothing further.
However, what if, instead of purchasing the Mariah Carey album in CD format, you elected to purchase the mp3 version on iTunes. Can you sell the mp3s just as you can sell the CD? According to a Federal court in New York in the case of Capitol Records LLC v. ReDigi Inc., the answer is “no.”
Capitol Records sued startup company ReDigi, claiming that ReDigi had infringed Capitol’s copyrights. ReDigi, which calls itself “the world’s first pre-owned digital marketplace,” was founded in 2011. ReDigi’s platform allows listeners to swap music tracks for substantially less than the traditional $.99 cost to purchase new on iTunes. ReDigi makes its money by charging fees on each transaction conducted on its platform.
Capitol Records’ lawsuit claimed that the Copyright Act’s First Sale Doctrine is not applicable to sales of “used” digital copies. The court agreed. It distinguished the situation of the resale of physical CDs (which, of course, are bought and sold in used music stores all the time) from the attempted creation of a marketplace for digital copies. Because ReDigi’s service requires the seller to upload the digital music on ReDigi’s servers, the court held that this was creating a new copy of the music. As a result, the First Sale Doctrine did not apply. The court found that in ReDigi’s situation, the original digital copy is reproduced when it is uploaded to ReDigi’s cloud service. ReDigi argued that there was no reproduction because the original digital copy would be removed as part of the process of reselling a digital file on its service. The court was not persuaded by that argument and, instead, simply focused on the fact that an unauthorized reproduction had been made. It stressed that the First Sale Doctrine only applies to the resale of lawfully made copies.
For reasons that are not clear, the court did not focus on another key issue raised by digital resales—whether the “purchaser” of digital music is an owner of a copy or merely a licensee of the copyright holder. iTunes and similar services make it clear that the content they offer is licensed, not sold. The First Sale Doctrine only applies to copyrighted works that have been purchased. This factor alone could have been enough to rule in favor of Capitol.
Instead, the court quoted and appeared to place a good deal of emphasis on a 2001 United States Copyright Office report to Congress that argued forcefully against allowing for a right to resell digital works. The report stated, in part:
“Physical copies of works degrade with time and use, making used copies less desirable than new ones. Digital information does not degrade, and can be reproduced perfectly on a recipient’s computer. The ‘used’ copy is just as desirable as (in fact, is indistinguishable from) a new copy of the same work. Time, space, effort and cost no longer act as barriers to the movement of copies, since digital copies can be transmitted nearly instantaneously anywhere in the world with minimal effort and negligible cost. Then need to transport physical copies of works, which acts as a natural brake on the effect of resales on the copyright owner’s market, no longer exists in the realm of digital transmissions.”
Clearly, the Copyright Office’s position was based, in large part, on the assumption that people selling digital copies would simply retain the original digital copy. Compare this to the situation of the resale of a CD in which that particular physical copy is sold. In my view, a key fact here is that the original owner of a CD no longer possesses that copy after it is sold. At the time of the 2001 report, a good technical solution to ensure that the original digital copy would be deleted in such a transfer situation did not exist. However, technology has advanced and there are more viable (albeit, imperfect) ways to assure that the original is deleted today. Nonetheless, this decision in favor of the copyright owners clearly draws the distinction between the treatment of digital and physical copies.
I believe this case could have a wide reaching impact beyond music to other types of digital works, such as games, movies and books.
