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Monthly Archives: May 2009

Thesis finishing, final paper writing

My graduate school year comes to a close in a few weeks.  I handed in my thesis today (and will be posting all 35 pages this week in some online fashion).  I’ll be getting into a more regular posting schedule over the next week or so, that is, at least until I find a job (still looking…).  Until then, blogging will be a fun but poorly paying stand in. Masters degree really comes in handy.

Where’s the value in fan creations?

One (of the many) points of contention with copyright law is how much it limits fan-created works.  Last week I wrote about a fan-made sequel to the classic video game Chrono Trigger that publisher Square-Enix forced to stop (only a few weeks before release). This fan-made sequel would never have replaced an official sequel. It was a labor of love from fans eager to promote their love to other people.  Cory Doctorow points out, under copyright law, you’re allowed to criticize a work but not praise it.

Under fair use, I can criticize any copyrighted work. I can use clips or excerpts from it to support my criticism. But if I want to promote or praise the work, it’s considered a derivative work, and I have to get permission the copyright holder.

But as my IP classmates say: “Without copyright law, no one will make Transformers.” And “No good has come from remix culture.” These are the future of IP law.

This is where fan creation gets pushed aside. It’s not only the content providers that over value their content. Consumers also give commercial content a higher value than fan or user-generated content, often recognizing professionals do it better (whatever it is). But this assumption under-values the real benefit of fan content.

Video games are the best example of this. Many games have whole-heartedly embraced fan content, providing free tools for fans to create their own levels and add-ons to games.  Fans help extend the longevity of the game with their own creations, extending the shelf life and value of the game for users. Even with tons of free content, game developers will release their own add-ons and fans will pay for them (sometimes even releasing fan content as official content).  These game developers are not scared of the competition – they know the professionally made content will have a larger, more captivated audience because of the fan content.  Other media are slow to realize how beneficial fan made content is for the lifespan of a project.

Fan content doesn’t compete with official content – it’ enhances it (I say official content because fan content can be commercial).  Only devoted fans of the Lord or the Rings would take time to make “Hunt for Gollum.” And only fans of the franchise will go out of their way to see it. Any non-fans who see it will quickly recognize it is not an official production and if they like it, they’ll find the official versions. And if they don’t like it, no harm done (increased expose nevertheless helps).

And to say no value comes from fan or remix content? Let’s understand what that is: All those Disney movies from Snow White to Cinderella to the Lion King are based on fairy tales, Shakespeare, and other already written stories, remixed by fans to tell new, exciting tales. West Side Story is no less entertain for remaking Romeo and Juliet and yet Romeo and Juliet remains popular to perform. Movie versions of books and plays often increase the popularity of the original work. Letting fans create labors of love cost the content creators nothing, but gives them every opportunity to gain. Let fans be fans.

Newspapers doomed, but it’s everyone else’s fault

I keep looking for other things to write about, but the newspaper industry just keeps giving me great posts to write.  Let’s first look at this Washington Post article that pretty much argues for ending all the useful innovations of the internet to save newspapers.  It’s written by two former newspaper lawyers, but the Washington Post wouldn’t be swayed by that kind of conflict of interest.

Michael Masnick does an already perfect job of dismantling the outrageous arguments in the article. To summarize, the authors, Bruce W. Sanford and Bruce D. Brown, seem to be calling for an end to search engines and fair use while expanding copyright law to cover “hot news” and allowing newspapers to violate antitrust laws (while still offering them tax breaks).

But all this talk of saving newspapers still ignores why newspapers are more important than news. Newspapers are not the only source of journalism and any legislative attempts to save them only support an obsolete business model. Masnick cites from Dale Harrison’s comments on the Post article.

A lesson worth remembering is at the turn of the 20th century people had a transportation problem…and the solution turned out not to be a “faster horse”…but a Ford.

And one should note that the Ford didn’t arise out of the “Horse Industry Revitalization Act”.

I think the future of the media business will look as different as Ford and Toyota’s operations look from horse traders and blacksmiths.

Imagine what the passage of such ill-conceived legislation would have done to the car industry a century ago.

Harrison goes on to show that newspapers, for decades, had a monopoly on distribution. This lead to inflated advertising prices and likewise inflated budgets (much of the reason newspapers are in trouble now is the massive amount of debt they acquired during the bubble 90s). This monopoly distribution is dismantled with the internet, forcing advertising prices down to real market values and giving customers almost infinite choices for their content consumption.  Because of this basic economic fact, newspapers cannot sustain the business model they’ve been using for the past century.  It’s time to evolve.

But we’re scared if we lose newspapers, we lose journalism because none of these bloggers or aggregators create content.  If that so, then why is Maureen Dowd getting accused of plagiarizing a blogger? I’ve already criticized Dowd’s incredible misunderstanding of the internet and newspaper economics as well as her accusations of copyright infringement at Google (even though Google only links to content).  I actually have no problem with Dowd copying the blogger (she can copy me anytime) – plagiarism can actually be a good thing sometimes – but Dowd’s hypocrisy shows that 1) newspaper journalists are not perfect and 2) some bloggers can apparently write really well.

Also, let’s note that bloggers exposed Dowd’s plagiarism and pressured her to update her column online (and a correction in the Times).

Thankfully, not every newspaper wants to remain in the 1980s. John Naughton writes for the Guardian saying capitalism will eventually kill off newspapers that can’t evolve, leaving the market winners to better understand how to run a news business (not just paper) in the 21st century.

The problem at the moment is that the web is awash with free content, and in a competitive market the price always converges on the marginal cost – which is currently zero. But as providers disappear (or, like Murdoch, decide to charge), the supply of free news will diminish and something more like a normal market will emerge. Only then will we find out what people are willing to pay for news.

That takes care of the economics. But what will journalism be like in the perfectly competitive online world? One clue is provided by the novelist William Gibson’s celebrated maxim that “the future is already here; it’s just not evenly distributed”. In a recent lecture, the writer Steven Johnson took Gibson’s insight to heart and argued that if we want to know what the networked journalism of the future might be like, we should look now at how the reporting of technology has evolved over the past few decades.

The future is now. See if you can catch up.

Different corporate approaches to fan creations

Just because you have a legal right to something doesn’t mean it’s always the right decision.  Copyright allows the creator of a work to control derivative works – creative works based on the original work.  This is a legal right of content creators, but enforcing it hurts the content creators more by alienating the very fans who keep them in business.

Let’s look at two examples.  First, fans of the Lord of the Rings created an impressive film telling an untold story using the characters and lore from the books.  “Hunt for Gollum” was a labor of love by people who love the Lord of the Rings so much, they spent their own time and money producing a film of amazing quality and storytelling.  Thankfully, Tolkien’s estate allowed the film to be released as long it was always non-profit.  But why only non-profit? These fans made this movie (and others will see it) because they already love the Lord of the Rings.  Fans know it’s not an authorized edition or cannon to the storyline (and if you ask most geeks, being cannon is the most important thing to get our interest).  This means if Tolkien’s estate comes out with their own telling of the same story, it will still have the same audience, plus more who found out about the fan-made film – it’s a win-win situation.

But not all companies see the benefits of fan production.  Video game publisher Square-Enix sent a cease-and-desist notice to a fan-made sequel to the classic game Chrono Trigger.  Square has taken down several fan productions related to Chrono Trigger, this most recent takedown happening mere weeks before the game’s release.  But what is the threat? Square is still free to release their own cannon sequels – this fan production only serves to increase the value and attention on this 15 year old franchise.  The people making this massive game are fans – the people Square should be supporting not suing.

Video games especially have shown how fan labors of love can help the series.  Many video games include modification tools to allow fans to create their own games and stories, either expanding on the official material or creating worlds of their own.  While Square has the legal right to stop these fan-games, they are hurting the very people who keep them in business.

How much money do companies leave on the table?

After my IP class last week, a classmate and I continued our debate.  He said something that stuck with me: “Companies won’t leave money on the table.”  But in many cases, companies do leave money on the table. Sometimes the risk isn’t worth the reward, but sometimes it’s sheer stubbornness.

I mentioned Farhad Manjoo’s article about why there is no iTunes for a movies a few weeks ago.  The reason, according to Manjoo, is there are too many contracts to renegotiate and too many people to get permission from to make an all-you-can-download movie service cost effective.  This is not because it’s actually expensive to make (all those BitTorrent sites seem to manage). It’s because the variety of rights holders demand too much money.  Rights holders over value their copyright (or patent other cases).  They demand more money than someone can make selling another product (like a download service).  Instead of getting paid, nothing gets done or sold, meaning everyone leaves money on the table.

Want a nice, clean consumer example? iTunes introduced variable pricing for music at the demand of the record companies.  Record companies could choose a lower 69 cent price, the regular 99 cent price, and a $1.29. Few chose the lower price, pushing popular and new songs to the higher $1.29.  Early results show the labels are losing money from the decrease in sales – unit sales have dropped to the point where actual revenue is lower than when prices were 99 cents. Don’t say they weren’t warned.

The examples are numerous, from newspapers threatening Google even though its sends them tons of free traffic to monetize to Warner Music demanding more money from YouTube and music games like Guitar Hero, ignoring the huge promotional benefit they get from both.  TV shows like the Wonder Years can’t appear on DVD or TV because of the over-priced music. Other shows have changed the music, from Dawson’s Creek to WKRP in Cincinnati.

In the patent world, having too many patents in one area is called a patent thicket and can make it hard for research because it requires so many different licenses (and too many companies over valuing their intellectual property) that it becomes cost-prohibitive to research either from licensing or lawsuits.  Some companies collect their patents to allow products to be made, but these patent pools often do more harm than good. This is even hampering drug research:

Peter Ringrose, chief scientific officer at Bristol-Myers, has said there are more than 50 proteins possibly involved in cancer that the company was not working on because the patent holders either would not allow it or were demanding unreasonable royalties.

Yes, I went there. You might die because greedy companies refuse to take money.

In all seriousness, intellectual property not only gives monopoly rights to a single entity, but it also comes a sense of entitlement that seems to hurt the rights holder and everyone down the supply chain, including consumers.  This is because rights holders significant over-value their own intellectual property.  Much of the value from content comes from how it reaches the consumer, whether on DVD, TV, or some innovative package.  Pricing yourself out of these products does not make your content more valuable – it devalues it because consumers don’t experience it.  Companies are leaving money on the table, not just from the initial royalties, but from the future revenue made by future sales of products based on new fans or new innovations.

Hulu and YouTube not at war: Let’s live peacefully together

As Hulu adds Disney to its video fold, some seem to be calling this a loss for YouTube. But YouTube and Hulu are very different video sites and hopefully will continue to evolve so as to co-exist peacefully for the benefit of all web video kind.

YouTube is the video site for the masses. Anyone can upload anything for any reason. It makes the site excellent for finding something, whatever that may be. And that makes it an excellent service for many people, from content creators trying to get noticed to guys filming their dog do funny things.  Hulu is the standard for premium, professional content from the legendary gatekeepers of entertainment.  Even as the two imitate each other, there is more than enough space on the World Wide Web for both.

Yes, YouTube is adding premium content and using much of Hulu’s interface. That’s good for everyone – Hulu has a great interface. But Hulu will never add the breadth and freedom of YouTube. Similarly, much of Hulu’s content providers refuse to give up the control a closed system provides (including, still bizarrely, blocking out most of the world from viewing the page).  Much of the apparent concern for YouTube comes from the higher ad rates Hulu gets for its premium content, but of course, this puts mistaken value on the content itself rather than the experience and the community.

Hulu is an excellent experience, when they aren’t blocking access, but it lacks the community that makes YouTube thrive.  While Google has yet to figure out how to monetize the community, there are still millions of loyal video makers and watchers devoting hours of their time to the making the site more enjoyable and valuable.  Already we’ve seen unique ways YouTube can be a tool for increasing wealth and marketing, from the recent Susan Boyle excitement (which increased sales of Les Miserable CDs) to the amazing Wario Land: Shake It video game ad (you must click the link to experience it fully). Plus, YouTube videos now allow links, allowing for some interesting new opportunities.

Obviously, I like YouTube, and I have some problems with Hulu. Basically, web video, like most aspects of the web, is not a zero-sum game. Just because Hulu gets something does not mean YouTube loses. YouTube finds its own market and its own success because of Hulu, not in spite of, and vice versa.  That’s called competition. And it’s a good thing.