Epicenter from Wired.com

Less than 24 hours after the season premiere of Prison Break aired on Fox on Monday, it was downloaded close to one million times, according to TorrentFreak.

Prison Break fans didn’t have to download the show illegally. The show is readily available to stream legitimately on both Hulu and Fox.com, where viewers have to sit through a few commercial breaks, but they can still watch the entire episode legally.

[Hulu won't disclose how many people viewed Prison Break on the site on Monday, but the show is one of the top 5 most-popular shows on Hulu today, and it was the most-popular show yesterday. There's no way of knowing, though, whether the program was watched more on Hulu than it was downloaded illegally.]

The fact that one million people downloaded the show within 24 hours — a little less than one-sixth of the 6.5 million people who watched Prison Break on TV on Monday night — proves, though, that P2P isn’t going away just because there are legal alternatives now.

“This is a group of people who define themselves in part by the technology they use and the application of that technology,” says Robert Rosenberg, president of Insight Research. “Chances are that this is only happening in a defined age group. You’d be hard-pressed to find 60 year-old guys passing this stuff off to their buddies.”

Even if file sharers make up a small slice of the population, the impact is not insignificant. Could networks win these viewers back? The most common complaint about big media companies over the last decade is that they’ve been slow to provide legal alternatives. In this case, however, Fox has gone to great lengths to give viewers an option to watch programs legally online, but die-hard file sharers still aren’t biting.

“I think a lot of the problem is that the content providers have typically been using business models that extend backwards in time. They have not been able to adapt their intellectual property and business processes to the new reality — essentially that all types of information and media are going to find their way on to a network and will be widely distributed,” says Rosenberg. “Look at the music industry. They simply didn’t have a formula for preventing file sharing until Apple taught them how to do it.”

Many legal alternatives could be improved, too, says Eric Garland, CEO of Big Champagne, an online media measurement company. Content providers have been slow to offer legal streaming options in many international markets, and there still aren’t many networks that let users actually download files, which is a bummer for collectors, says Garland.

Also, the networks haven’t necessarily improved upon the experience on pirated sites, so users don’t have much incentive to leave those sites.

“If it ain’t broke, don’t fix it,” says Garland. “Sites like Mininova or Pirate Bay have been around long before there was Hulu, and why should they stop using a familiar option that works well?”

Wired Science from Wired.com

But in most of the viral and bacterial world, copying genes and having your own copied is a way of life, one that proceeds smoothly without hindering either party. It’s a fundamental property of microbe- and virus-hood.

“Anything might happen. The virus doesn’t know. It simply does it because it can,” said Koonin. “The ability to do so is simply a byproduct of the ability to replicate DNA.”

Positech Games

A few days ago I posted a simple question on my blog. “Why do people pirate my games?”. It was an honest attempt to get real answers to an important question. I submitted the bog entry to slashdot and the penny arcade forums, and from there it made it to arstechnica, then digg, then bnet and probably a few other places. The response was massive. This is what I found:

Cato Unbound » Blog Archive »

How relevant is it to declare oneself to be “for” or “against” copyright? Neither the stabilization nor the abolition of the copyright system seems within reach. All we see is a seemingly endless assembly line of new extensions to the law being proposed and enacted. The most recent is the proposed “Anti-Counterfeiting Trade Agreement” (ACTA) [1], to be tabled at next month’s G8 meeting in Tokyo, including a clause known as the “Pirate Bay killer” that would force countries to criminalize services that may facilitate copyright infringement, even if not for profit. This is just one example of how copyright law is mutating into something qualitatively different than what it has been in previous centuries.

| Listening Post from Wired.com

Radiohead’s “pay what you want” distribution gamble paid-off despite — or perhaps because of — rampant file sharing, according to new analysis from Will Page, chief economist at the MCPS-PRS Alliance, a British rights organization, and Eric Garland, CEO of Big Champagne.

Radiohead’s notorious release strategy for In Rainbows, which allowed fans to download it for an optional price with a valid e-mail address, was considered to have been a failure by some because the album became wildly popular on file sharing networks almost immediately upon its release.

But Garland and Page’s, “In Rainbows, On Torrents” report, slated to be released on the MCPS-PRS website on Friday, indicates that Radiohead’s strategy was a success nonetheless, contributing to the album topping the charts in both the UK and United States and a wildly successful worldwide tour. When it comes to judging whether an album is a success these days, the old metrics just don’t cut it.

The report found that torrent users traded 400,000 copies of In Rainbows on its October 10 release date, and that it was shared a staggering 2.3 million times by November 3 (chart courtesy of BigChampagne). By comparison, albums by Gnarls Barkley, Panic at the Disco and Portishead released around the same time using conventional means were shared less, the most-frequently shared being Panic at the Disco’s album, which was downloaded 157,000 in a week — nearly three times lower than In Rainbows’ peak day of trading).

Many within the music industry (including U2 manager Paul McGuinness) will no doubt view these 2.3 million downloads as sales Radiohead lost by giving the album away in a readily-sharable format. And either way, they represent email addresses that Radiohead failed to add into its fan database.

Will_page_2 Garland and Page admit that server problems on Radiohead’s site almost certainly drove some users to torrent trackers, as did the fact that Radiohead had “signaled” to fans that the album was free. But their most interesting finding about why fans chose to download the album via torrent rather than from InRainbows.com is their hypothesis that users adhere to music acquisition venues regardless of other factors.

“The venue hypothesis suggests that even when the price approaches zero, all other things being equal, people are more likely to act habitually (say, using The Pirate Bay) than to break their habit (say, visiting www.InRainbows.com),” reads one section of the report. In other words, people tend to develop habits around the acquisition of music; once they find something that works, they tend to keep using it. As the paper mentions, “The Pirate Bay is a powerful brand with a sterling reputation in the minds of millions of young music fans.”

The hard lesson to the music business here is that it must license venues for music acquisition that fans prefer to file sharing networks or otherwise make the toleration of file sharing part of their business plans. If even Radiohead’s freely available album was torrented 2.3 million times in the first three and a half weeks, how can more traditional offerings successfully clamp-down on file sharing? They can’t, pure and simple.

In addition, official offerings like InRainbows.com need not be considered to be in competition with file sharing networks, as hard as that may be for longtime music insiders to comprehend.

“Frequently, music industry professionals suggest that an increase in legitimate sales must necessarily coincide with a commensurate reduction in piracy, as if this were a fact,” says the report. “Yet, the company BigChampagne has made no such consistent observation in nearly a decade of analyzing these data. Rather, it finds that piracy rates follow awareness and interest… The biggest selling albums and songs are nearly always the most widely pirated, regardless of all the ‘anti-piracy’ tactics employed by music companies. Or, to sum up by paraphrasing an earlier argument, ‘popular music is popular everywhere it’s popular.’”

Exactly. All of this torrenting of In Rainbows contributed to the album making such a big impression on a listening public that’s bombarded with an ever-increasing amount of information. Without its album being so widely traded, would Radiohead’s album have shot to the top of the charts? Would their worldwide tour be such a smashing success?

Eric_garland_2 Not necessarily, says the report, and we agree. Applying economic principles to digital music, Garland and Page found that “the challenge of achieving popularity (or attention) when the old rules of scarcity and excludability don’t apply (to information goods) the way they used to, changes the monetization game completely.” And Radiohead clearly won that game, regardless of how many times its album was traded online.

Garland and Page came to the undeniable conclusion that the music industry needs to stop thinking of shared files as lost sales, and start treating them as an aspect of reality upon which they can build part of their businesses.

As for Radiohead, they can rest easy knowing that while their strategy will now come under increased scrutiny by enemies of file sharing within the industry, that by “losing” the battle for the email addresses of those who downloaded their album via bit torrent, they actually won the overall war for the public’s attention — no easy feat, these days.

The report is now available here.

Computerworld

“Piracy hurts open source because open source asks people to help give back and contribute code, but they say, ‘Why should I help? I have Microsoft Office for free,’” Suarez-Potts said.

Around the world, he said, many national governments are realizing that this hurts them, too, because their citizens are then consumers of stolen technology rather than active participants in open-source communities that can help people gain technology skills that benefit workforces and nations.

By cracking down on software piracy, nations around the globe are starting to see that they can help themselves dramatically by encouraging innovation and creativity — as well as job growth and richer economies — through open-source development, he said.

“China wants to create workers who can do this and create and sustain wealth,” rather than just sell pirated software that doesn’t improve the lives of the country’s people, Suarez-Potts said. “We will all benefit if they are creating interesting things.”

Other nations, including India, are making similar discoveries, he said. “They really quite clearly see that they should have their own intellectual ecosystems. China is now embracing open source and is asking how they can work with the international communities; likewise in India and Latin America.”

guardian.co.uk

The agreement between internet service providers, the government, and the music industry to send angry letters to music fans who are downloading free music is a smokescreen, intended to obscure the crisis the record industry is facing.

This agreement has come about as a result of music industry pressure on ISPs who are, after all, facilitating their customers’ free music downloads. If this were an ordinary copyright infringement case, the record companies would put their lawyers onto the ISPs. However, everyone knows that the music industry is using internet sites, particularly the big social networks such as MySpace, to promote their artists.

It is just not in the music industry’s interest to bite the hand of the ISPs, which provide them with access to potential customers. But on the other hand, the industry does have a case against the ISPs – so what is to be done? I imagine some corporate boardroom representing the ISPs shrugged their shoulders and said “well I suppose we could send them a warning letter”. The industry moguls replied “yeah a warning letter – that’ll do it”.

But of course a warning letter won’t do it. Without some kind of legal framework to back it up, it’s nothing more than a gesture. The real problem for the record companies is that the ground is changing beneath them. New technology has made it possible for people to acquire music without going through the traditional route of buying objects in a shop.

Rather than fighting this trend, the industry itself needs to find new methods of collecting royalties. The only real moral argument the industry has that will work with music fans is that the artist should be rewarded financially for providing them with music. Yet everyone knows that historically the record industry has paid artists a fraction of the price paid by the public for albums and singles.

What needs to happen is for the industry to reverse its priorities, put artists to the fore and pay them a larger share of the price in return for their support in the transition to new business models. It is doesn’t take a huge amount of imagination to conceive of other ways of levying royalties where original music is used. The way we get radio in the UK offers two simple examples.

On one hand, we have the BBC service, where for the price of the licence fee you can listen to as much radio as you like. On the other hand, there is commercial radio, which is free at the point-of-use to you, the listener. However, the fact that it is free doesn’t mean the music content is not paid for. Royalties are paid to musicians from the sale of advertising that appears between the songs. Either of these two models could be applied to music.

A licence fee could be paid, allowing you to download as much music as you like, which will be simpler to police as you would need to presumably give your licence number before you download anything. Or sites such as MySpace, which make billions of dollars in advertising revenue without paying for any content whatsoever, could reverse that trend and start paying royalties to musicians and other content providers.

In an ideal world, such royalties or the blanket licence fee would not be paid to music companies themselves but to an independent collection agency that would pay the money directly to artists. The music industry treats the internet as a threat, whereas for artists it gives us an opportunity to get closer to our audience than ever before. We must be very, very careful that we don’t alienate those fans and make it impossible for the next generation of singer-songwriters to have viable careers.

Editor’s Choice | Reuters

The only real solution is to legitimise the peer-to-peer services. Rather than fighting against music sharing, the music industry should issue licenses that allow royalties to be collected every time a song is shared. The snag, of course, is how to generate those royalties in the first place. The slow uptake of music subscription services proves it’s unfeasible to ask people to opt in to paying 10 pounds a month for music.

The Irish Times – Fri, Jul 11, 2008

In this brave new world, the music companies would have to go much further. They would have to permit individual consumers to copy and distribute their artists’ works: effectively making those the customers both the purchaser and the “reseller”. That risks creating a monster: a legal file-sharing network that would challenge their own role as the chief distributor of music, at the same time as eating into sales of their products, such as CD singles and albums.

The recording industry has no choice. It is already faced with that monster and at least by placing a voluntary charge on those who are already sharing their music, it has a chance of benefiting from what is now second nature for many net users. The BPI’s plans to hunt down the file- sharers and exile them to a net-free life is simply a continuation of the strategy of prosecuting their own core markets, and criminalising the technologies that could save them. After 10 years, the rhetoric and the sanctions grow louder, but file-sharing shows no signs of slowing down.

Economist.com

“MERCHANT and pirate were for a long period one and the same person,” wrote Friedrich Nietzsche. “Even today mercantile morality is really nothing but a refinement of piratical morality.” Companies, of course, would strongly disagree with this suggestion. Piracy is generally bad for business. It can undermine sales of legitimate products, deprive a company of its valuable intellectual property and tarnish its brand. Commercial piracy may not be as horrific as the seaborne version off the Horn of Africa (see article). But stealing other people’s R&D, artistic endeavour or even journalism is still theft.

That principle is worth defending. Yet companies have to deal with the real world—and, despite the best efforts of recorded-music companies, luxury-goods firms and software-industry associations, piracy has proved very hard to stop. Given that a certain amount of stealing is going to happen anyway, some companies are turning it to their advantage.

For example, around 20 times as many music tracks are exchanged over the internet on “peer to peer” file-sharing networks as are legitimately sold online or in shops. Statistics about the traffic on file-sharing networks can be useful. They can reveal, for example, the countries where a new singer is most popular, even before his album has been released there. Having initially been reluctant to be seen exploiting this information, record companies are now making use of it (see article). This month BigChampagne, the main music-data analyser, is extending its monitoring service to pirated video, too. Knowing which TV programmes are being most widely passed around online can help broadcasters when negotiating with advertisers or planning schedules.

In other industries, piracy can help to open up new markets. Take software, for instance. Microsoft’s Windows operating system is used on 90% of PCs in China, but most copies are pirated. Officially, the software giant has taken a firm line against piracy. But unofficially, it admits that tolerating piracy of its products has given it huge market share and will boost revenues in the long term, because users stick with Microsoft’s products when they go legit. Clamping down too hard on pirates may also encourage people to switch to free, open-source alternatives. “It’s easier for our software to compete with Linux when there’s piracy than when there’s not,” Microsoft’s chairman, Bill Gates, told Fortune magazine last year.

Another example, from agriculture, shows how piracy can literally seed a new market. Farmers in Brazil wanted to use genetically modified (GM) soyabean seeds that had been engineered by Monsanto to be herbicide-tolerant. The government, under pressure from green groups opposed to GM technology, held back. Unable to obtain the GM seeds legitimately, the farmers turned to pirated versions, many of them “Maradona” seeds brought in from Argentina. Eventually the pirated seeds accounted for over a third of Brazil’s soyabean plantings, and in 2005 the government relented and granted approval for the use of GM seeds. Monsanto could then start selling its seeds legitimately in Brazil.
Innovators ahoy

Piracy can also be a source of innovation, if someone takes a product and then modifies it in a popular way. In music unofficial remixes can boost sales of the original work. And in a recent book, “The Pirate’s Dilemma”, Matt Mason gives the example of Nigo, a Japanese designer who took Air Force 1 trainers made by Nike, removed the famous “swoosh” logo, applied his own designs and then sold the resulting shoes in limited editions at $300 a pair under his own label, A Bathing Ape. Instead of suing Nigo, Nike realised that he had spotted a gap in the market. It took a stake in his firm and also launched its own premium “remixes” of its trainers. Mr Mason argues that “the best way to profit from pirates is to copy them.”

That this silver lining exists should not obscure the cloud. Most of the time, companies will decide to combat piracy of their products by sending in the lawyers with all guns blazing. And most of the time that is the right thing to do. But before they rush into action companies should check to see if there is a way for them to turn piracy to their advantage.

Science Journal – WSJ.com

We all bristle at people who put themselves ahead of the common good, whether it is by evading taxes, shirking military service, cheating on bus fares or littering. Many of us will go out of our way to shame, shun or otherwise punish them, researchers have shown. That’s how we foster a community that benefits everyone, even at some cost to ourselves.

Economists analyzing ingredients of the social glue that holds us all together wonder whether that public spirit of rebuke and reward is an innate human value or a byproduct of the particular society in which we live. Until recently, however, they rarely have reached across cultural boundaries to compare how people in disparate communities actually weigh private gain against public good.

In the most sweeping global study yet of cooperation, a team of experimental economists tested university students in 15 countries to see how people contribute to joint ventures and what happens to them when they don’t. The European research team discovered startling differences in how groups around the world react when punishment is handed out for antisocial behavior.
WSJ’s Robert Lee Hotz speaks to Kelsey Hubbard about an important study that looked at how people responded to peer pressure in cooperative ventures across many societies.

In some countries, researchers found, almost no good turn went unpunished. “What kept popping up is this element of retaliation,” said economist Benedikt Herrmann at the U.K.’s University of Nottingham, who reported the experiment this past March in Science. “It took us by surprise.”

Among students in the U.S., Switzerland, China and the U.K., those identified as freeloaders most often took their punishment as a spur to contribute more generously. But in Oman, Saudi Arabia, Turkey, Greece and Russia, the freeloaders more often struck back, retaliating against those who punished them, even against those who had given most to everyone’s benefit. It was akin to rapping the knuckles of the helping hand.

To explore cooperation across cultures, Dr. Herrmann and his colleagues recruited 1,120 college students in 16 cities around the globe for a public-good game. The exercise is one of several devised by economists in recent years to distill the complex variables of human behavior into transactions simple enough to be studied under controlled laboratory conditions.

The volunteers played in anonymous groups of four. Each player started with 20 tokens that could be redeemed for cash after 10 rounds. Players could contribute tokens to a common account or keep them all to themselves.

After each round, the pooled funds paid a dividend shared equally by all, even those who didn’t contribute. Previous research shows that a single selfish individual riding on the generosity of others can so irritate other players that contributions soon drop to nothing.

That changes when players can identify and punish those who don’t contribute (in this case, by deducting points that can quickly add up to serious money). Once such peer pressure comes into play, everyone — including the shamed freeloader — starts to chip in.

“Freeloaders are disliked everywhere,” said study co-author Simon Gachter, who studies economic decision-making at Nottingham. “Cooperation always breaks down if people can’t punish.”

The students behaved the same way in all 16 cities until given the chance to punish those taking a free ride on the shared investment. Punishment was done anonymously, and it cost one token to discipline another player.

Among those punished, differences emerged immediately. Students in Seoul, Istanbul, Minsk in Belarus, Samara in Russia, Riyadh in Saudi Arabia, Athens, and Muscat in Oman were most likely to take revenge by deducting points from other players — and to give up a token themselves to do it.

“They didn’t believe they did anything wrong,” said economist Herbert Gintis at New Mexico’s Santa Fe Institute. And because the spiteful freeloaders had no way of knowing who had punished them, they often took out their ire on those who helped others most, suspecting they must be to blame.

Such a readiness to retaliate, researchers said, reflected relatively lower levels of trust, civic cooperation and the rule of law as measured by social scientists in the World Values Survey, which periodically assesses basic values and beliefs in more than 80 societies. In countries with democratic market economies, peer pressure goaded people to cooperate. Among authoritarian societies or those dominated more by ties of kinship, freeloaders instead lashed out at those who censured them, the researchers found.

“The question is why?” said Harvard political economist Richard Zeckhauser.

No one is sure. The freeloaders might be angry at being trumped by strangers, or be unwilling to share with people they don’t know. They also might believe they are being treated unfairly.

But social appearances and the good opinion of others do regulate our behavior. In the only other major cross-cultural study of this sort, Dr. Gintis and his colleagues several years ago examined 15 primitive societies of farmers, foragers, hunters and nomads in 12 countries, not unlike those in which humanity might have first evolved. The researchers found that these people all cared as much about fairness as the economic outcome of a trade. “They care about the ethical value of what they do,” said Dr. Gintis.

Independent brain-imaging teams in Japan and the U.S. have shown just how valuable approval can be, as they reported in April in Neuron. Researchers at Japan’s National Institute for Psychological Sciences found that when they watched the brain respond to reputation and social status, the excited synapses looked awfully familiar: They were the same ones activated by money.

Studying peer pressure in 15 countries, economist Benedikt Herrmann at the UK’s University of Nottingham reported on “Antisocial Punishment Across Societies”³ in Science.

The researchers also ranked the national responses against the World Values Survey⁴, which periodically assesses values and cultural changes in societies all over the world.

Searching for the
origins of economic behavior, an international research team studied 15
primitive cultures in 12 countries and reported their findings in

“In Search of Homo Economicus: Behavioral Experiments in 15 Small-Scale Societies”⁵

We may be hard-wired to care about social standing, scientists at the US National Institute of Mental Health reported in “Know Your Place: Neural Processing of Social Hierarchy in Humans.”⁶

At Japan’s National Institute for Psychological Sciences, researchers reported in “Processing of Social and Monetary Rewards in the Human Striatum”⁷ that reputation activates the same brain areas as money.

Free-market philosopher Adam Smith, author in 1776 of An Inquiry into the Nature and Causes of the Wealth of Nations⁸ wrote first in 1759 on praise, blame, ethics and human nature in The Theory of Moral Sentiments⁹.

– Entertainment on The Huffington Post

After 17 years of running my record label spinART Records, I shut it down. The advent and general adoption of the Internet, digital media and hardware took control of the global music industry away from the record labels and media outlets and handed it to the masses. For the first time in history, through sites like TuneCore, all music creators can choose to be their own record label. There are no longer subjective gatekeepers controlling who gets let “in,” promoted and exposed. The choice is ours. Now, anyone can be famous.

Kevin Kelly   writes about needing only 1000 true fans to make a living as an artist. Just to note: I was writing about this in 2006.

Karl Sigfrid

Decriminalizing all non-commercial file sharing and forcing the market to adapt is not just the best solution. It’s the only solution, unless we want an ever more extensive control of what citizens do on the Internet. Politicians who play for the antipiracy team should be aware that they have allied themselves with a special interest that is never satisfied and that will always demand that we take additional steps toward the ultimate control state. Today they want to transform the Internet Service Providers into an online police force, and the Antipiracy Bureau wants the authority for themselves to extract the identities of file sharers. Then they can drag the 15-year-old girl who downloaded a Britney Spears song to civil court and sue her.

Los Angeles Times

A few days ago I came across an Op-Ed submission that called for file sharing to be decriminalized. The editors here decided not to run it, but it intrigued me for a couple of reasons. First, the author, Karl Sigfrid, is a member of the Swedish Parliament from the Moderate party — a pro-business party that’s akin to this country’s Libertarians (except in Sweden they’re more than just a fringe group). Second, although he covered much of the same ground earlier this year in a Swedish paper, Sigfrid’s new piece added another provocative contention: that unauthorized downloading isn’t actually theft.

FT.com print article

   

Copyright The Financial Times Limited 2008

Digital Music News

How should paid downloads be priced? Apple believes in a uniform pricing scheme, majors want a tiered structure, and most music fans want everything for free. Somewhere in-between lies Amie Street, a company that sets download pricing based on user demand.

That means that songs start at free, and ramp to 98-cents if the demand is great enough. But is the model working? Just recently, the group announced the addition of catalog from Beggars Group, Matador Records, and Polyvinyl Recording Co. The list of bands includes Interpol, Sigur Ros, Pavement, Yo La Tengo, Devendra Banhart, Belle and Sebastian, Architecture in Helsinki, and other indie luminaries.

But it remains unclear if the sales story is developing, at least at this stage of the game. In a discussion Monday, company cofounder and chief marketing officer Joshua Boltuch declined to offer sales figures or average pricing data. Boltuch did point to strong album purchasing, and an album-to-single sales ratio of 1:1. “We attribute this incredible ratio to our fan-driven pricing model finding the best market price for albums, and therefore maximizing sales,” Boltuch explained.

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WireD

But some labels will disappear, as the roles they used to play get chopped up and delivered by more thrifty services. In a recent conversation I had with Brian Eno (who is producing the next Coldplay album and writing with U2), he was enthusiastic about I Think Music — an online network of indie bands, fans, and stores — and pessimistic about the future of traditional labels. “Structurally, they’re much too large,” Eno said. “And they’re entirely on the defensive now. The only idea they have is that they can give you a big advance — which is still attractive to a lot of young bands just starting out. But that’s all they represent now: capital.”

Center for Social Media at American University

When college kids make mashups of Hollywood movies, are they violating the law? Not necessarily, according to the latest study on copyright and creativity from the Center and American University’s Washington College of Law.

The study, Recut, Reframe, Recycle: Quoting Copyrighted Material in User-Generated Video, by Center director Pat Aufderheide and Peter Jaszi, co-director of the law school’s Program on Information Justice and Intellectual Property, shows that many uses of copyrighted material in today’s online videos are eligible for fair use consideration. The study points to a wide variety of practices—satire, parody, negative and positive commentary, discussion-triggers, illustration, diaries, archiving and of course, pastiche or collage (remixes and mashups)—all of which could be legal in some circumstances.

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