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11. 6.2007

Delong on EU's Microsoft Decision

Jim Delong on the EU's Microsoft theory--and the implications for the rest of tech. He notes among other things:

Any company with a significant market share could be defined as "dominant," and forced to disaggregate an integrated product into as many separate pieces as the EC, or competitors, desire. The possibility is very real that the EU will force manufacturers to forego integration lest they run afoul of some objection filed in the future, complete with retroactive fines, and force consumers to pay for the integration services.

For an immediate example, makers of integrated circuits should worry. As Moore’s Law works its magic, they are incorporating into a single chip features that were once put on complementary chips, as recently noted by tech investment guru Paul McWilliams.

posted by Solveig Singleton @ 7:47 AM | International , Software , Standards

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10.18.2007

User-Generated Content: A Principled Market Response

Some of the most interesting challenges for digital-age copyright policy arise from the growing popularity of user-generated content (UGC). UGC offers exciting new possibilities for people to create or interact with their favorite works, but it raises thorny problems that range from its potential to facilitate infringement to questions about reconciling the creative potential of UGC with other creators’ interests in the artistic integrity of their works.

Fortunately, one advantage of letting enforceable property rights generate markets for socially valuable goods and services is that markets require participants to find “win-win” solutions: In a market, a given transaction should occur only if all parties to it are better off as a result. Markets thus create potent incentives to reconcile divergent interests.

The solution-generating power of markets was evident today when a diverse coalition of technology and media companies released Copyright Principles for UGC Services. The Principles attempt to define a win-win-win solution: A set of ground rules that will promote respect for copyrights, the production of UGC, and the development of innovative platforms for promoting and distributing it. Key provisions of the Principles include the following:

1) UGC sites should use “highly effective” filtering technologies, or human review, to identify and remove infringing content before it is uploaded and enhance or update those technologies as significant advances become commercially available.

2) Copyright holders and UGC sites should cooperate to ensure that filtering systems effectively balance legitimate interests in blocking infringing uploads, allowing original or authorized uploads, and accommodating fair use.

3) Copyright holders and UGC sites should develop procedures to promptly address conflicting claims of ownership, and user’s claims that filtered content was not infringing.

4) Copyright holders should neither file infringement claims against UGC sites that adhere in good faith to the Principles nor assert that adherence to the Principles disqualifies a UGC site from claiming the benefits of safe-harbor protections like those in the DMCA.

At their core, the Principles seek cooperative solutions to the possibilities and challenges posed by UGC. For that, they should be applauded. When property rights are unclear, or not respected, we often resort to non-market-based dispute-resolution mechanisms—like litigation. But litigation does not promote win-win outcomes and may leave all parties worse off. Companies like Disney, Microsoft, NBC-Universal, MySpace, Daily Motion, CBS, Viacom, and Fox deserve great credit for this effort to identify solutions that balance their interests with those of creative consumers. Bravo.

posted by Thomas Sydnor @ 5:46 PM | DMCA , Enforcement & Remedies , Internet: P2P, Search Engines... , Markets: Business, Investment & Innovation , Prices, Terms, and Licensing , Standards

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07. 2.2007

Licensing Standards for the Internet--DRMWatch

DRMWatch reports on the efforts to develop standards for licensing on the Internet, including the hesitation of search engines to participate:

ACAP sounds like a great idea: instead of the search engines indexing whatever they want and publishers responding through litigation -- as has certainly been the case thus far -- why not agree on a machine-readable language for expressing the rights that publishers want search engines to have.

Such rights would include the right to crawl (index) the content, to display it in various forms in search results, to attribute its source appropriately (a la Creative Commons), and even to implement certain access models such as "first click free."

posted by Solveig Singleton @ 9:45 AM | Internet: P2P, Search Engines... , Prices, Terms, and Licensing , Standards

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02. 9.2007

Standard Setting

Microsoft's Jason Matusow looks behind the curtain of the standard-setting process -- maybe it should be added to the sausage/laws duad.

The creation of standards is not a pretty process, and it is important to remember that no one participates in a standard-setting activity by accident. Standards are not created by accident - there has yet to be a situation where someone stumbled over an obstacle while carrying a stack of technical specifications and serendipitously ended up with a standard. Standards participation is generally focused on advocacy of a specific technology (usually in order to create a market opportunity) or on unseating an encumbant technology. These may seem to some as unsavory goals, but they are usually the drivers for companies to participate. Governments have a different set of goals in standards, for example health and safety or the fostering of market competition. Yet governments too have some corners of their standards closets that they don't flashlights peering into too deeply. There are constant claims and counter-claims of block voting by some countries, or trade barriers being erected through standards, or protectionism of a specific industry from disruption by new competitors.

posted by James DeLong @ 9:48 AM | Standards

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09.14.2006

More on MySpace and News Corp

Folllowing up on yesterday's entry, RoughType sees the situation as a conflict between the technology and ideology of the Net, which puts a premium on openness and intersite mobility, and the commercial dictates of a revenue model based on advertising, which forces a site proprietor to try to keep eyeballs from straying.

Much has been made of the ease of launching Web 2.0 sites - the costs of the equipment are relatively low and most of the necessary coding is relatively simple. But for entrepreneurs, that cuts both ways. It's easy to launch a site that, by capitalizing on the net's open technological structure, "plugs into" other popular sites, drawing users that can then be fed ads, but it's also easy for the popular sites to incorporate new services and tools, in effect blocking the exits.

He also notes:

The same tension can be seen influencing Google's evolution, though with a twist. On the one hand, Google's very existence hinges on the technological openness of the net. On the other hand, as an advertising-driven operation, Google has strong economic incentives to keep users on its own property. . . . And so we see Google perform an exquisite balancing act, supporting openness while also extending its own tools and services, through acquisition and in-house development. Google would never say what Chernin said, but its strategy in the end is not so different from the one Chernin laid out.

posted by James DeLong @ 6:00 AM | Standards

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09.13.2006

Microsoft Plays Nicely

While Microsoft’s aggressive profit motive, capitalist incentive based decision making and ability to quickly launch new products/ services endear it with business investors and customers, these qualities give the Redmond giant a devious reputation among competitors, and some developers (especially in the FOSS movements) who often villify the company. Now CNET reports on Microsoft’s Open Specification Promise (OSP):

Microsoft is pledging not to assert its patents pertaining to nearly three dozen Web services specifications--a move designed to ease concerns among developers by creating a legal environment more friendly to open-source software…

The specifications, some of which are still going through the standardization process, cover 35 interoperability protocols, including advanced standards, such as WS-Management, which are not yet widely implemented in commercial products.

There are already open-source implementations of some of these Web services specifications under development, such as Apache Axis and Apache Synapse at the Apache Foundation.

Continue reading Microsoft Plays Nicely . . .

posted by Noel Le @ 4:23 PM | Free Culture Movement , Standards

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Interoperability & MySpace

IPCentral occasionally writes about esoterica such as interoperability and platform companies, usually in the context of software and the Microsoft wars.

But the questions won't stay caged. The latest brouhaha is that the CEO of News Corp ruminated about the relationship of News Corp's MySpace to other Web 2.0 services:

“If you look at virtually any Web 2.0 application, whether its YouTube, whether it’s Flicker, whether it’s Photobucket or any of the next-generation Web applications, almost all of them are really driven off the back of MySpace,” Chernin said at the conference. “There’s no reason why we can’t build a parallel business.”
While Chernin said MySpace’s video efforts are small at the moment, that could change. He estimated that 60%-70% of YouTube’s traffic comes from MySpace.

Naturally, those who regard free riding as a basic human right are outraged -- viz, Good Morning, Silicon Valley and Tech Crunch.

The critics conflate two different issues, though. The question whether MySpace would be wise to integrate the ancillary aps into its in-house system is one issue; if it did so, it might well find that the ap providers established their own platforms that competed with My Space, and that it had made a mistake. But this issue is totally different from the question whether News Corp has some obligation to avoid competing with the add-ons. In the end, platforms must be paid for, and if the add-ons do not help with support then their claim on the platform provider is nil.

If the platform provider charges directly for access, of course (the Microsoft Windows model), then the add-ons add value that make the platform more valuable and the platform provider has strong incentives to nurture them. Without a revenue model, though, or with a revenue model that throws platform and aps into competition in selling eyeballs to advertisers, it is hard for such symbiosis to develop.

posted by James DeLong @ 2:46 PM | Standards

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08.28.2006

The FTC Spanks Rambus

Thanks to Greg Aharonian for the link to the FTC's material on Rambus, for naughtily trying to sneak patented tech into a standard:

"Rambus withheld information that would have been highly material to the standard-setting process within JEDEC. JEDEC expressly sought information about patents to enable its members to make informed decisions about which technologies to adopt, and JEDEC members viewed early knowledge of potential patent consequences as vital for avoiding patent hold-up. Rambus understood that knowledge of its evolving patent position would be material to JEDEC's choices, and avoided disclosure for that very reason."
"Through its successful strategy, Rambus was able to conceal its patents and patent applications until after the standards were adopted and the market was locked in," states the opinion. "Only then did Rambus reveal its patents - through patent infringement lawsuits against JEDEC members who practiced the standard."

Analyzing Rambus's conduct under the standards of Section 2 of the Sherman Act, the Commission found that "Rambus engaged in exclusionaryconduct that significantly contributed to its acquisition of monopoly power in four related markets. By hiding the potential that Rambus would be able to impose royalty obligations of its own choosing, and by silently using JEDEC to assemble a patent portfolio to cover the SDRAM and DDR SDRAM standards, Rambus's conduct significantly contributed toJEDEC's choice of Rambus's technologies for incorporation in the JEDEC DRAM standards and to JEDEC's failure to secure assurances regarding future royalty rates - which, in turn, significantly contributed to Rambus's acquisition of monopoly power."

Since I am skeptical of antitrust concepts generally, I can't help but wonder how this would have played out as a plain old contract suit, assuming the standards-setting body dealt with Rambus on those terms.

And lest this be taken for a screed in favor of excluding patented tech from standards no matter what, I add this

Continue reading The FTC Spanks Rambus . . .

posted by Solveig Singleton @ 1:20 PM | Antitrust , Patents , Standards

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08.14.2006

What Lemley Would Do with Patents and Open Source

I’m sure you’re all aware of Professor Mark Lemley from Stanford Law School. In a new article Lemley proposes policy changes to ameliorate current abuses of the patent system: Ten Things to do About Patent Holdup of Standards (and One Not To) (August 10, 2006). Stanford Public Law Working Paper No. 923470. These abuses arise from the complexity of modern technological innovation, coupled with the phenomenon of “patent trolls.”

Patents provide needed incentives. But in certain circumstances, they can give a patentee too much power to restrict an integrated product on the basis of a patent covering a minor component of that product. 11.

Having previously described patents as the system that has “fostered American growth and entrepreneurship,” Lemley is careful to point out that abolishing patents for the technology industries as neither a viable nor desired step. Many bad patents may exist yet “there are a number of significant inventions in the IT space that deserve patent protection.” 2. “Napsterizing” software patents as many open source supporters call for isn't Lemley's approach. Rather, Lemley takes a more considered view to: “realign incentives so that the value any given patentee can capture bears a reasonable relationship to the contribution their invention makes.” 11.

Continue reading What Lemley Would Do with Patents and Open Source . . .

posted by Noel Le @ 12:54 PM | Free Culture Movement , Patents , Standards

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08.10.2006

Fragmented DRM Systems and Innovation

What is the current consumer view on DRM? Perhaps they focus on the lack of interoperability between iTunes songs and most non-Apple music players, or the inability to play various music services on the iPod. While some online music services and music players are free of DRM, these issues highlight incompatibility, or fragmentation, between DRM systems. This fragmentation does not simply result from preferences of technology or content companies, but rather the business dynamics they work under.

Although standardization of DRM systems would result in lower prices for digital goods, this has not occurred as some scholars like Suzanne Scotchmer of Berkeley predict. In Fragmentation versus Standardization in the Market for Digital Rights Management Solutions (July 2006), several rearchers at Law and Economics Consulting Group ask why, and find that fragmentation of DRM solutions arises from market competition and the different uses of DRM that firms leverage. 10. Acknowledging that fragmented DRM schemes not only prevent price reducation but also limit the value of products for consumers, the researchers point out the ease enabled by low switching costs between different proprietary brands. 17. They note that users often buy several different DRM solutions at once, as content owners often release their content in many different formats. 18.

However, the benefit of fragmented DRM systems arises in competition to create products with greater functionality and value, thus bringing more innovation to market in the long term. 20. Competitors find ways of leveraging existing content sources and perhipherals, such as RealNetwork’s reversing engineering of Apple’s DRM around iTunes. 20. The DMCA may bring restrictions, yet the market has its own correcting balance through increasing the flexibility with which consumers can enjoy content. 23. Finally, as no DRM systems have become industry standard "vendors compete for more content owners by developing secure DRM solutions, and for customers by offering a wider selection of content and more flexibility with the purchased product." 20.

… when the iTunes store first opened in April 2003 songs purchased were only able to be played on 3 computers… RealNetworks, MusicMatch and Wal-mart all entered the digital download market, and Wal-mart offered downloads for a mere $0.88 that we able to be played on up to 10 computers. It is very likely that Apple’s choice to lower restrictions on its DRM protected content was a direct result of increased competition in the digital download market… although there could be a wide breadth of restrictions limiting customer’s right of fair use, the competition among online stores has increased users’ flexibility with protected content. 23.

posted by Noel Le @ 4:12 PM | DRM & Watermarks, etc. , Prices, Terms, and Licensing , Standards

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05.15.2006

Interoperability

posted by James DeLong @ 7:20 AM | Standards

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04. 3.2006

DVD Standards ... No Agreement Yet

posted by Solveig Singleton @ 1:41 PM | Standards

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03.27.2006

Mandating DRM Interoperability, in France and Beyond