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To rent or to own. The record labels may soon find that they have been renting all along. The 1976 Federal Copyright Act included a provision for termination rights, so artists could claw back the underlying economic rights to their songs and music after thirty-five years. Because the 1976 Act did not pass until 1978, 2013 is the magic year, and both sides of the table have already begun their preparations.

As far back as 1999, Mitchell Glazier, then copyright counsel to the Republican head of the Judiciary Committee, inserted language into an omnibus bill that would redefine sound recordings as work for hire. Reclassified as such, the work of musical artists would no longer include termination rights. It would equate them to rank and file employees of the the record labels. The bill and the amendment passed quietly, with little outside recognition of its contents or consequences. Says William Patry (via NYT), “That amendment was essentially passed in the middle of the night.” Within a year, however, artists learned of the change and successfully lobbied Congress to roll it back. Glazier would go on to be the Chief Lobbyist at the RIAA.

Today, with 2012 looming, the field has been set. The recording artists and the recording industry have each dug into their positions. With bulwarks made, the battle is set to begin. Was Springstein’s Darkness on the Edge of Town a work for hire, as the recording industry claims? Or as June M. Besek, executive director of the Kernochan Center for Law, Media and the Arts at the Columbia University School of Law, says, “Where do they work? Do you pay Social Security for them? Do you withdraw taxes from a paycheck? Under those kinds of definitions it seems pretty clear that your standard kind of recording artist from the ’70s or ’80s is not an employee but an independent contractor.”

Don’t expect the debate to be resolved by an unnoticed bill passing in the middle of the night.

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I’ve had the date circled in red for 35 years, and now it’s time to move. Year after year after year you are going to see more and more songs coming back to songwriters and having more and more influence on the market. We will own that music, and it’s still valuable.

Rick Carnes, president of the Songwriters Guild of America, remarking on the prospect of exercising termination rights as allowed by the 1976 Federal Copyright Act. The rights allow performers to reclaim copyright for songs after 35 years. Because the Act was passed in 1978, the earliest expected termination will be in 2013: via NYT

This is a life-threatening change for them, the legal equivalent of Internet technology.

Kenneth J. Abdo, chair of the termination rights working group for the National Academy of Recording Arts and Sciences: via NYT

this american life – on patents, and those such as chris crawford’s that cover foundational aspects of our online existence that, in this particular instance, overlaps with 5303 other patents with similar claims, which happens to be not so unusual. It happens 30% of the time.

On the $4.5b Nortel patent portfolio sale to the Apple-led consortium…

That’s $4.5 billion on patents that these companies almost certainly don’t want for their technical secrets. That $4.5 billion won’t build anything new, won’t bring new products to the shelves, won’t open up new factories that can hire people who need jobs. That’s $4.5 billion dollars that adds to the price of every product these companies sell you. That’s $4.5 billion dollars buying arms for an ongoing patent war.

JUSTICE BREYER: So that would mean that every — every businessman — perhaps not every, but every successful businessman typically has something. His firm wouldn’t be successful if he didn’t have anything that others didn’t have. He thinks of a new way to organize. He thinks of a new thing to say on the telephone. He thinks of something. That’s how he made his money.
And your view would be — and it’s new, too, and it’s useful, made him a fortune — anything that helps any businessman succeed is patentable because we reduce it to a number of steps, explain it in general terms, file our application, granted?

MR. JAKES: It is potentially patentable, yes.

JUSTICE BREYER: Okay. Well then, if that were so, we go back to the original purpose of the Constitution. Do you think that the Framers would have wanted to require anyone successful in this great, vast, new continent because he thinks of something new to have had to run to Washington and to force any possible competitor to do a search and then stop the wheels of progress unless they get permission? Is that a plausible view of the patent clause?

….

JUSTICE SOTOMAYOR (addressing Jakes): No, but a patent limits the free flow of information. It requires licensing fees and other steps, legal steps. So you can’t argue that your definition is improving the free flow of information.

:: via Bilski v. Kappos – oral arguments, Monday, November 9, 2009. Later, Justice Breyer would ask Jakes, counsel to Bilski, whether his novel method of teaching antitrust law is patentable.

I strongly believe that the recent trend to patenting algorithms is of benefit only to a very small number of attorneys and inventors, while it is seriously harmful to the vast majority of people who want to do useful things with computers. When I think of the computer programs I require daily to get my own work done, I cannot help but realize that none of them would exist today if software patents had been prevalent in the 1960s and 1970s. Changing the rules now will have the effect of freezing progress at essentially its current level.

Donald Knuth, letter to the Commissioner of Patents & Trademarks, USPTO, February 1994

Inventions must be tied to a particular machine or transform something. Useful, concrete, and tangible result of State Street is inadequate.

David Kappos, Federal Circuit, in re Bilski, 30 October 2008

Patents aren’t bad. They’re an essential element of our economic system. The patent system and the 1952 shift to the protection of a process is the problem.

The 1952 Patent Act expanded coverage to include industrial processes. With the increasing importance of manufacturing to the economy, Congress had been successfully lobbied to provide a layer of protection around industrial manufacturing processes. With the Act, however, it introduced the framework by which to patent business processes – patents such as one click buy. The patents have muddied the water and introduced an expensive and chilling sense of uncertainty to business and information-oriented innovation.

Patents start with a basic tension. Economies benefit from the dispersion of ideas accompanied by sharing the details of inventions. Inventors, however, have little incentive to share the details if it results in no more than a roadmap for competitors to follow. Patents offer inventors a simple trade-off. Make public the details of your invention, and the government will in exchange grant the exclusive right to exploit it.

The 1952 Patent Act was designed to advance manufacturing quickly. Industrial processes, without the protection of a patent, might remain trade secrets, and these trade secrets were perhaps too valuable to the economy to be kept private. A patent system designed to protect them would open them up and accelerate growth. Or maybe it was more facile than that. Patents would provide legal protection and accrue enterprise to those that developed them. Either way, the patent system shifted from one organized around physical designs to one accommodating of processes. Read the rest of this entry »

The facts do not owe their origin to an act of authorship.
Justice Sandra Day O’Connor (Feist v Rural Telephone, 1991)

But does the hunt, the research, the interviews? Or perhaps its organization into a story for the dissemination to a reading public? And can these be made exclusive? These questions have bubbled up as the newspaper industry wrestles with what the internet is doing to their business.

The Cleveland Plain Dealer’s Connie Schultz has argued fervently about the rights of authors and their newspapers to capitalize on their product. She came out against “the aggregators” as though they were a malfeasant band of marauders bent on destroying the institution of journalism and by extension democracy. Citing Daniel and David Marburger, she claimed, “parasitic aggregators reprint or rewrite newspaper stories, making the originator redundant and drawing ad revenue away from newspapers at rates the publishers can’t match.”

James Moroney, publisher and CEO of the Dallas Morning News takes a similar approach. He invokes the ‘hot news’ doctrine and asks congress to apply it to the internet. Says Moroney, “perhaps it is time for congress to establish a principle of ‘consent for content’ for breaking news–similar to the ‘hot news’ doctrine recognized by a few states.”

Copyright law sufficed to protect the written word, fixed in a medium, but these claims demand remedy for a larger issue. They aim to protect the investment required to collect the facts and write a story, when it might easily be re-written and distributed by another. But they ask for monopoly control of the story itself — indeed, ownership of the collection of facts and ideas that might make up a breaking story on government corruption, for example. Justice O’Connor, however, finishes with little support for these views: “The distinction is between one of creation and one of discovery.” And discovery is not subject to property rights.

The viewpoints of Moroney, Schultz and the Marburgers have their origin in the nature of print. Print leads to a confusion between controlling the medium and controlling the content – that is, the mistaken idea that breaking a story equates to owning it. The Supreme Court compounded the confusion in 1918 with its decision to augment copyright protection with “quasi-property rights” for the facts and events that make up a news story — the hot news doctrine. It was a legal solution for the disruptive impact of a new technology: newswires. News was paper, and these rights formalized the metaphor. They derived from the physical qualities of the paper, attached property rights to the news and would provide a legal basis from which to make, in this case, the AP’s news exclusive. Theoretically, the AP could then exclude people from learning of it or reprinting it without permission. They wouldn’t just report the news, they would own the news. Read the rest of this entry »

seminal social networking patent, owned by Mark Pincus and Reid Hoffman. In-Q-Tel and Tacit systems also have some patents in this area, and they are also investors in Facebook.

Knowledge, instead of being bound up in books and kept in libraries and retirements, is thus obtruded upon the publick
Spectator no. 507 on the Spectator, 1711

One imagines the libraries and retirements encircling prized volumes. Access is limited. The doors are closed on hushed, dark rooms, and rude custodians may or may not respond to the knocks of visitors. The lively entertainments of the mind, pressed flat and laid up in shelves, are collected — excluded from the general population. Mr. Spectator lights up these entertainments, unbinds them from their pages, and sends them around the room and into society. He obtrudes them upon the public.

The pseudonymous Mr. Spectator offers a voice that would direct many of the discussions of the day, through education and entertainment, in 18th Century London. His daily issue, launched and written by Joseph Addison and Richard Steele 1711, would be called The Spectator.

Addison & Steele’s Spectator boasted a distribution of 3000, through hawkers and mercuries, and a readership upwards of 40,000: “every page submitted to the Tast of forty or fifty thousand Readers” [No.508]. But the finances were unclear and, at best, shaky. The paper, which paused mid-stream for a substantial hiatus, only lasted just over six hundred issues.

The optimism is palpable, but the rewards were not. The nascent newspaper was more likely to lose money than make anyone rich. More often than not, publishers struggled to make the business work while slowly draining their investors. The Spectator was among an exceptional few to survive the tax increase of the Stamp Act. Their story, however, is surprisingly similar to what we see in today’s shift to digital media.

What Addison & Steele and others discovered was mass media, a new media in its own right. Then as now, their efforts derived from changes in regulation and technology and competed with the traditional forum for news – the pulpit then, and newspapers today, for example. The competition among dailies divided the public into publics, each driven by the tastes and temperaments of its readers. These early dailies changed the public’s relationship to knowledge and brought it out of libraries and retirements in the same way that today’s new media brings news out of the newspapers, for example, and generally enlarges the free-marketplace of ideas.

Addison & Steele’s budding media empire flourished when placed in the hands of the audience. Today’s newspapers and magazines would have you believe the same, but it’s distinguished in one key way. It has built up a dependence on paid circulation. This was less important than one might think for those early publications. Instead, they relied on reputation and influence at first, followed by advertising. Paid circulation was, in effect, a manner of subsidizing distribution.

Mass media’s origins in 18th century newspapers began with two developments. The speed of the printing press introduced the possibility of the daily — something unthinkable in the age of scriptoriums. The status of the written word would shift from scarcity to abundance. The dearness of a volume, which had been measured by the many hours and men required to copy it, was rapidly sliding toward the price of the paper on which it was printed. Second, with the lapse of the Licensing Act in 1695, prepublication censorship ceased. Print would emerge everywhere and could include anything. Many would publish not only the inventions of the moment, they would uncover and disseminate the knowledge from those libraries and retirements — all for not much more than the price of the paper itself.

Early newspapers would supplant the pulpit and occupy an advanced position on both book publishing and the congregation. The pulpit provided the equivalent of a weekly news show. Congregations received the news once a week in a format and fashion that was faster and easier to consume than books. As Elizabeth Eisenstein observes in The Printing Press as an Agent of Change, “before the advent of printing, events of significance, when reported at all, were usually conveyed from the pulpit” [p. 553]. The sermon might address world events, local trade, real estate transactions, and politics. The newspaper, however, would insert itself in the daily routine of many: “the pulpit was ultimately displaced by the periodical press” [p. 131].

If changes in regulation and technology leading up to the 18th century fostered the sudden supply of publications, what drove the need? The demand for publications such as the Tatler, the Spectator, the Craftsman, the London Daily Post emerged as a genie from a bottle. The public wanted newspapers. They wanted something different than the weekly lessons and announcements from the pulpit. Eisenstein remarks, “the dictum ‘nothing sacred’ came to characterize the journalist’s career” [p. 131]: it wasn’t the church. Instead, among the teeming dailies, one could choose the the right one for one’s self. Dailies didn’t just discover an interested public, they discovered interested publics, each with their own tastes and preferences.

Addison & Steele’s ambition to serve a reading public changes society’s relationship to knowledge. Knowledge would no longer be exclusive. Obtruded upon the publick, it would reach into new corners of society to be consumed, critiqued, and engaged. Addison & Steele’s Mr. Spectator would write in Spectator no. 10, “I have brought philosophy out of closets and libraries, schools and colleges, to dwell in clubs and assemblies, at tea-tables and in coffee-houses.” The Spectator would be one of many vehicles for this change, and distribution would drive it to thousands in 18th century London.

The Spectator would mine the libraries, his competitors, and the conversations at the coffee-houses for the facts and ideas behind each missive. The collected ore would only be valuable inasmuch as it would capture the attention of his readers. With the diversity and detail of the web, today’s contributors mine newspapers, magazines, books, official announcements, and just about anything they can get their hands on. One might characterize these as transactions in the free marketplace of ideas, but then as now, they sparked controversy. Just as the pulpit may have been upset with the rise of the newspaper, traditional media finds itself frustrated by the thousand-fold rehashing and reinvention of the facts and ideas that had once seemingly been their province alone.

The public begins as the recipient of the shifting relationship to knowledge, but they also become the object. The Spectator, for example, took the public as a specimen under its lens. Mr. Spectator is among them, observing them, surveying them, and refracting everything back through its daily issue. Jurgen Habermas would later claim, in The Structural Transformation of the Public Sphere, “in the Tatler, the Spectator, and the Guardian the public held up a mirror to itself.” The public could see itself through these early papers and have a “conversation with itself.”

Today’s changes in technology and a mindset rooted in net-neutrality and open systems have yielded similar innovations. The internet, blogs, and increasingly creative media ventures that have become substitutes and complements to traditional media. Both moments yielded an efflorescence of expression that was fertilized by rapidly diminished costs and threatened to supplant existing institutions: the congregation and traditional media. And both moments relied on the ability to rehash and reinvent the accumulated knowledge of their time to fill their pages, virtual or otherwise. The resulting fragmentation of readers would replay many of the changes ushered in with the the early 18th century dailies.

Could these early publishers charge for this? Barely. What would matter for Addison & Steele and their counterparts today was the audience, and their success would not be measured in how much people paid for the content, but in the reputation they developed and the ability to advance the interests of the proprietor and their investors.

The Spectator built Addison’s reputation. He wasn’t concerned that his readership far exceeded the paid circulation by more than ten-fold: the more, the better. His reputation among them would provide other opportunities. The Spectator, after all, was his second publication. It followed the Tatler, and it was his reputation that enabled him to do both. Later, he would harvest these efforts through the sale of bound volumes of each.

We see something similar with blogs such as Joel on Software, which was later published as a series of books. Combined, the blog and books undergird his company’s credibility as a leading software developer, which has led to ventures such as Stack Overflow. Meanwhile, Brad Setser’s consistently trenchant, though not always well edited, observations on currency flows from the Council on Foreign Relations ultimately led him to a position in the White House, and Julie Powell’s musings on Julia Child morphed into a book deal, a movie, personal complications, followed by another book deal.

Investors in early newspapers sought influence and profits through circulation. More often than not, they may have found influence, but not the profits. The paper, however, was well-suited to advancing their individual interests. They may have been merchants or theater owners, so they would use their position to obtain better advertising rates, coverage or otherwise. Michael Harris, in London Newspapers in the Age of Walpole, remarks: “the efficacy of the papers as vehicles for house advertisements could more than offset a limited return.” In these cases, the newspaper is an agent for the partners’ agenda: providing owners a venue to advertise their establishments.

Fred Wilson’s blog has slowly impressed him upon the New York venture community in a way that uniquely positions his venture capital firm among investors and entrepreneurs. Michael Arrington’s thriving conference business owes its origin to Techcrunch. Barry Ritholtz has leveraged The Big Picture to cultivate an asset management business. The reputations in each of these examples drive a venture-investment business, a conference business, and an asset management firm.

Addison & Steele’s were early days in the newspaper business. They and others managed to advance the reputation and interests of themselves and their investors. Soon, however, they would make a dramatic realization. If they could do it for themselves, they could certainly do it for others, and they would have a third leg on which to stand. Doing so would require a dramatic leap: they would have to sell the audience. They would invent advertising as we know it.

Advertising started as the province of the proprietor and his investors. Advertisements were a privilege bundled with ownership – house advertisements. We see advertisements for booksellers, who may have been investors or close associates. But this would change. Just as blogs have been festooned with advertisements, early newspapers would realize that the audience might also be valuable beyond the proprietor and his investors.

The first advertisements in the Spectator were almost an afterthought. They showcased books that their printer, Sam Buckley, or his friends had printed. In Lawrence Lewis’sThe Advertisements of the Spectator, he observes, “As the circulation of the ‘Spectator’ increased among ‘the quality,’ the example of the booksellers was followed, first by the mercers and haberdashers, then by the dealers in snuffs and wines and teas, by quacks and sellers of cosmetics and nostrums for every human ill, and, finally, by the managers of places of amusement.”

Advertisers began to include not just partners, but interested parties. Advertisements for soap or perfume joined those of the booksellers. Harris observes, “by the mid-1720s the amount of space devoted to this material was provoking some vigorous criticism.” By the mid-1720’s, early newspapers had meaningfully unbundled the privilege of advertising from ownership. For the first time, anyone who wanted an audience could access one. The audience became a service to be delivered:the newspaper, a the service provider.

Early newspapers, like new media, flourish when they’re in the hands of an audience. They flourish when they enhance the reputation and influence of their proprietors and, through advertising, others — not because they’ve been charged for it, but because of the externalities that develop from an engaged, reading public. If that’s the case, should The Spectator have become a free publication and follow today’s flat dictum that information wants to be free?

Addison & Steele never conceived of giving the Spectator away, but it’s worth wondering if they would today. They were thrilled to claim a total readership of more than ten times the paying readers, but would they give those paying readers up? Probably not. Addison & Steele’s circulation pattern provides an early example of versioning in information goods. Hal Varian explains versioning as a pricing method for information goods that sorts potential customers based on the quality of the good that they need. In Addison’s case, those who absolutely needed The Spectator would buy it on its first run. Those who could wait would pick up copies from friends or a table at Button’s coffee-house.

Versioning, however, works differently today. The internet has no equivalent to picking up a newspaper from the table at Button’s or the floor of the subway. If there is, it’s in the form of passed links, aggregators, and comments and analysis that show up on blogs. But unlike with The Spectator, or even a paper copy of The New York Times, the chain generally does not begin with an initial sale. The first version is either free or behind a pay-wall: either available or not. It isn’t sold and read, only to be left on the coffee-house table. And if it’s behind a pay-wall, barring any individual indiscretions with copyright, there is no second version for someone to pick up. By analogy, it would mean Addison’s reliance on a readership of 3000, not 40,000. What would that do to his ability to monetize his following? It certainly would have impacted his influence.

The consternation about pay-walls that has captured the current imagination is fundamentally a question about versioning. The New York Times and Newsday and others are looking for the digital equivalent to the table at Button’s coffee-house. What model will allow them to sell a first-version? The physical paper provided a solution, but the shift to digital does not invoke an obvious replacement. And a pay-wall risks severely limiting their audience and influence.

Many online media ventures have avoided the issue entirely by offering one version, free of charge, to their audience. Passed links, blog-mentions, aggregators and others provide the digital equivalent of shared and found newspapers – the digital coffeehouse. Their influence can grow with the appeal and availability of their perspective. Considering half of the Spectator‘s circulation revenue went to the Stamp Tax, after the cost of printing and paper, there was very little left over for the owners, so there would be very little difference between being a free publication on the internet and a paid publication in print. An online Spectator would probably be a free Spectator: today’s raft of free blogs and new media ventures, its inheritors.

The Spectator and early newspapers would evolve into the inky reams that we know today, but it turns out that they may be a closer cousin to today’s emerging media landscape. Both moments fostered marginal businesses that owed their origin to dramatic changes in technology and a change in regulation, in the case of the Licensing Act, and a mind-set, in the case of net-neutrality and open systems that dominates the web. Neither looked like any newspaper that we would recognize in the 20th century, but they would go on to change society’s relationship to knowledge and disrupt traditional sources of information, from the pulpit then to institutions such as modern newspapers now. Their economic success for lay in the ability to derive externalities from their audience in the form of reputation and, later, advertising.

A bright line, however, still separates our modern print publications and the inheritors of The Spectator: the ability to version. The ability to version on the internet has proved difficult to incorporate and become a painful reminder of the many differences between print and the digital medium. What is the digital equivalent to the 18th century coffeehouse? Encouragingly, the New York Times recently answered with the announcement of its paywall strategy. If it’s passed to you, by twitter or a friend, please read it; otherwise, pay. You’re either a patron or a coffeehouse. Perhaps invoking the spirit of Addison and Steele will reinvigorate their prospects.

Dow Jones invests considerable resources to produce timely and trusted news and business information. Briefing.com has been brazenly taking a free ride on the reputation of our publications and on the investment Dow Jones makes in quality, real-time journalism….Dow Jones respects and defends the rights of other news organizations to report on news events in a timely manner. Here, however, Briefing.com did not use its own resources to uncover, verify and describe news events. It waited for Dow Jones to do all the work, and then simply copied the content. In order to continue to offer the quality news and business information customers expect and count on, Dow Jones will take action to stop the misappropriation of its content.

Mark H. Jackson, general counsel for Dow Jones: via BusinessWire

Breifing.com has been free-riding on Dow Jones’ substantial investments in gathering and reporting timely news

The Complaint

It’s produced a river of gold, but those words are being taken mostly from the newspapers. I think they ought to stop it, that the newspapers ought to stand up and let them do their own reporting.

Rupert Murdoch, speaking at a taping of “The Kalb Report” at the National Press Club in Washington on April 6: via Bloomberg

There are those who think they have a right to take our news content and use it for their own purpose without contributing a penny to its production. Content creators bear all the costs, while aggregators enjoy many of the benefits. In the long term, this is untenable…It’s not fair use. To be impolite, it’s theft.

Rupert Murdoch, speaking at the U.S. Federal Trade Commission’s workshop in December: via Bloomberg, BusinessWeek

Our culture no longer bothers to use words like appropriation or borrowing to describe those very activities. Today’s audience isn’t listening at all – it’s participating. Indeed, audience is as antique a term as record, the one archaically passive, the other archaically physical. The record, not the remix, is the anomaly today. The remix is the very nature of the digital….

“Who owns the words?” asked a disembodied but very persistent voice throughout much of Burroughs’ work. Who does own them now? Who owns the music and the rest of our culture? We do. All of us.

Though not all of us know it – yet.

William Gibson, writing in 2005: via Wired

The Speculations of Mr. Spectator

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