The Oscars this past Sunday night demonstrate the continuing vibrancy of the film industry, notwithstanding dire declarations of the harm online infringement causes.
The film industry is increasingly global, both in production and distribution. 60% of the industry’s $26 billion total gross in 2013 came from outside of the United States. The international box office is up 32% over the past five years.
Awards and nominees were similarly international. The winning movies 12 Years a Slave and Gravity were helmed, acted, and designed by numerous British and Mexican artists (e.g., Steve McQueen, Chiwetel Ejiofor, Benedict Cumberbatch, Mark Sanger, Alfonso Cuarón, Emmanuel Lubezki, among others). Gravity’s Oscar-winning director and editor, Alfonso Cuarón, delivered part of his acceptance speech in Spanish. Australians like Cate Blanchett won in three categories, and Europeans also dominated the live action and animated short awards.
The film industry is promoting a new generation of actors to appeal to new audiences. While some of the nominees in the best actor categories are industry veterans (e.g., Judi Dench, Meryl Streep, Sandra Bullock, and Julia Roberts), the industry is promoting a new generation of stars to compete for the attention of young audiences. For example, 23 year-old Jennifer Lawrence won the Best Actress award last year for Silver Linings Playbook and was nominated for Best Support Actress this year for American Hustle. At the same time, she starred in the two Hunger Games movies, which have grossed globally over $1.5 billion.
The film industry is embracing new technologies. Director Alfonso Cuarón delayed production of Gravity until technology could be developed to create the stunning visual effects that made the actors appear as if they were drifting weightless in space. Innovative uses of technologies such as 3-D, computer graphics, and digital sound provide audiences with fresh experiences that encourage them to go to the movies. The industry encourages the development of new technologies both through investment and recognition in a special awards ceremony.
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Twenty years ago today, the Supreme Court issued its landmark decision in Campbell v. Acuff-Rose, its most recent consideration of fair use. The Court made clear, in a unanimous opinion, that a commercial parody was fair use under Section 107 of the U.S. Copyright Act. A lower court had held that the rap act 2 Live Crew’s “Pretty Woman,” a lewd skewering of Roy Orbison’s saccharine love ballad “Oh, Pretty Woman,” was presumptively unfair because it was a commercial parody. When the group and frontman Luther Campbell appealed, the Supreme Court reversed, holding that the “more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.” (Some interesting C-SPAN coverage of the case before the Court’s decision, hinting at class overtones of the dispute is available here.)
Perhaps since the early 1980s, when New York courts blessed Saturday Night Live’s riff on the “I Love New York” theme with biblically-themed skit entitled “I Love Sodom,” there had been an understanding that commercial parodies did not “compete” with the targeted work. This, even though SNL’s send-up of a crime-ridden but image-conscious New York as a modern day Sodom and Gomorrah likely undermined the city’s efforts to promote tourism.
Campbell cemented the viability of commercial parody in U.S. copyright jurisprudence, along with the principle of “transformativeness” as one motivating principle of Congress’s decision to enact fair use. The idea of “transformativeness,” often associated with Judge Pierre Leval’s influential 1990 article, “Toward a Fair Use Standard,” has helped ensure that innovative new commercial technologies, which often involve copying but still increase the value and accessibility of creative works, can come to market.
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At 36, Seattle-based Ben Huh is an entrepreneur who has pioneered one successful version of the modern publishing business model with his company the Cheezburger Network.
Huh’s startup is the home to user-generated humor sites such as the Fail Blog, I Can Has Cheezburger, Memebase, and Know Your Meme. He is the company’s CEO, and his wife Emily, 34, is the director of business development. Each month, more than 20 million people around the world visit Cheezeburger sites, generating more than 200 million page views. The company has attracted $37.5 million in venture financing, and in the past few weeks just launched a network of Spanish user-generated humor sites. The original company was founded in 2007. In addition to the Web sites, the company has published three books. It has also shot its own reality TV show called “LOLwork” on the cable channel Bravo.
Besides the realization that cats and other animals are popular on the Internet, the foundational insight driving Cheezburger’s success is Huh’s realization that people love to caption photos and otherwise interact with content to create something new – and in their eyes – original. He calls it peer-to-peer humor. Another insight is that as more of the population around the world spends their time on social media, and less on big media sites, advertisers are looking to maintain their contact with these fragmented audiences. Cheezburger’s sites are one way to do this. The company’s role, he says, is to build a “playground” for the audience, with tools to create the entertaining memes that foster those many “subcultures” that now make up that larger fragmented audience.
The success of these insights has led to the company’s expansion to 50 employees (although the company has laid off employees to adjust to a world that accesses the Internet more frequently through mobile phones,) and knocks on the door from big consumer brands asking how they can become more involved in order to generate more awareness of their products among Cheezburger’s hyper-engaged audience.
The members of Congress supporting the Stop Online Piracy Act and the Protect IP Act in 2012 discovered for themselves how hyper-engaged Cheezburger and other user-propelled sites’ users are when they received millions of phone calls and Tweets protesting the proposed legislation after some of the sites went black January 18th in opposition to the legislation.
So it seemed worthwhile to the Disruptive Competition Project to check in with Huh. He recently shared his thoughts on the current status of copyright law, and how it’s affecting both his business and the evolution of Internet and pop culture.
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DisCo has written extensively about the Aereo case now in the Supreme Court, (e.g., [1], [2], [3], [4]) but reading some old commentary, I realized we’ve never quite explained precisely how the outcome of Aereo can threaten cloud computing. The matter seems particularly relevant since briefs were filed in the Supreme Court yesterday in support of ABC and the other broadcasters pursuing Aereo. (All briefs should eventually appear on SCOTUSblog.)
In short, the Aereo case puts the cloud at risk because when broadcasters have complained about Aereo, their complaints also describe cloud computing. It isn’t that broadcasters necessarily bear malice toward cloud computing; it is just that when broadcasters complain about how Aereo works, their complaints describe cloud-enabled access to content. The cloud is caught in the crossfire.
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A few weeks ago, the tech press lit up with several articles discussing Google’s recently revealed “Mobile Application Distribution Agreement” (MADA). The Wall Street Journal was others based their articles on claims surfaced by Ben Edelman — a Harvard Business School professor who consults for many of Google’s competitors — claiming that certain contractual terms surrounding Google Mobile Services were anticompetitive.
Specifically, Edelman contends that the following MADA provisions harm consumers:
Conditioning access to certain Google mobile applications (i.e Search, Maps, Play, YouTube, Gmail, Google Calendar, etc.) on a commitment to
(a) preload an integrated suite of applications on the device;
(b) give certain Google applications premium placement on the phone; and
(c) make Google search and Google network location provider the default options.
Unfortunately, most of the articles left many of the premises underlying Edelman’s arguments unchallenged. There is a lot going on here that needs unpacking and a lot of assumptions built into Edelman’s “analysis” that don’t pass a common sense test, let alone an economics test. I’ll tackle a few of the biggest problems in Edelman’s arguments below.
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It’s been a while since DisCo has reported on Uber, the startup that is known equally for its app that connects passengers with drivers and for doing a remarkable job engaging its users to challenge local governments and incumbent taxi companies. One of the cities in which Uber is currently facing an existential threat is Houston.
On Sunday, Team Uber Houston wrote a blog post calling Houston to action, including a petition (which was signed by more than 10,000 people) and information on a City Council hearing on Tuesday. And yesterday, Team Uber Houston put out another post with the shocking information that the City of Houston is trying to silence its citizens.
Please consider this as a formal demand that your client, Uber, cease and desist from transmitting or aiding in the transmission of form e-mails to City officials regarding the adoption of an ordinance to accommodate their enterprise. Despite my informal request to you by telephone on Monday, the excessive number of e-mails has gone unabated, to the point that it has become harassing in nature and arguably unlawful. Failure to cease and desist will be met with appropriate action by the City.
Elected officials censoring their constituents for complaining about an ordinance that affects them is a little bit ironic. (Their job, in theory at least, is to legislate and serve their constituents… which entails people telling them what they are upset about.) And by sending Uber this letter, which Uber fortunately publicized, the City of Houston is only further emboldening Uber and its customers to fight for competition.
If you think competition between companies drives innovation, what might happen when they also have to go up against autonomous pieces of software running distributed across millions of computers through the Internet and around the world? It sounds like something out of a Singularity obsessed science fiction novel, but if you know where to look, the bones of this idea are already beginning to be seen today. The results might look pretty strange still, but there are some fascinating things happening in the “Distributed Autonomous Corporation” (DAC) area.
A DAC is a (so far) hypothetical construction that could perform at least some of the same functions as a corporation, non-profit organization, or other grouping of humans without the centralized legal or physical trappings of those organizations. This could be accomplished by creating a blockchain-type system (similar to that running Bitcoin) in which the code that makes up the DAC runs. DACs are simply algorithms tied to payment accounts that pay for their own computing cycles used, are paid for the services they provide, and can modify their own code.
DACs as an idea have been tossed around the Bitcoin community for a few years, and were somewhat codified in a series of blog posts by Stan Larimer beginning with “Bitcoin and the Three Laws of Robotics”. Larimer posits that the Bitcoin system itself is a DAC, suggesting that much of the network’s value comes from “performing a trustworthy confidential fiduciary service,” much like a Swiss bank would do. Unlike a Swiss bank, however, Bitcoin is open source and thus anyone can look at the code and be relatively assured that the network itself will act as designed and is worthy of trust. Of course, as we’ve seen time and again since the launch of the Bitcoin software, the same cannot be said of the human beings that may provide any related services.
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As Jakob’s post from yesterday notes, last week’s Svensson ruling came as a relief to copyright watchers everywhere when it concluded that a hyperlink to a publicly available work did not constitute a ‘communication to the public’ in a manner that exercised the copyright holder’s exclusive right in that work. (Let us not ask, at the moment, how copyright law could come so close to doing something so outlandish as requiring every hyperlink on the World Wide Web to be licensed.)
The Court of Justice for the EU (CJEU) arrived at that point through a curious analysis: a hyperlink to another server is communicating the work (notwithstanding the fact that a hyperlink is merely an instruction, and the actual content upload is done by the hosting party), but a link is not communicating to the public because the rights-holder has already done that, and the hyperlink merely makes the work available to the same “public taken into account by the copyright holders when they authorised the initial communication.” (para. 27).
Stated simply, the conclusion was: “since there is no new public [resulting from a hyperlink], the authorisation of the copyright holders is in any event not required for such a communication to the public.” (para. 30).
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What would the Internet be without its intermediaries? Nothing, that’s what. Intermediaries are what carry, store, and serve every speck of information that makes up the Internet. Every cat picture, every YouTube comment, every Wikipedia article. Every streamed video, every customer review, every online archive. Every blog post, every tweet, every Facebook status. Every e-business, every search engine, every cloud service. No part of what we have come to take the Internet for exists without some site, server, or system intermediating that content so that we all can access it.
And yet, if we’re not careful, we can easily lose all the benefits these intermediaries bring us. Thankfully, in the United States we have some laws that help ensure they can exist, chief among them 47 U.S.C. Section 230. As my recent paper on the state of the law regarding intermediary liability explains, this law stands for the proposition that intermediaries are only responsible for what they themselves communicate through their systems – not what others use them to say. For example, newspapers that post articles online are only responsible for the content of the articles they publish, not the comments readers then post to them. Similarly consumer review sites are only responsible for the information they supply to their sites, not the user reviews themselves. This same principle also means that people who link to content (as search engines do) are not legally responsible for that content, even if that content should happen to be illegal in some way (like by being potentially defamatory).
The reason Section 230 has been so helpful in allowing the Internet to thrive and become this increasingly rich resource is that by relieving intermediaries of liability for the content passing through their systems it has allowed for much more, and much more diverse, content to take root on them than there would have been had intermediaries felt it necessary to police every byte that passed through their systems out of the fear that if they didn’t, and the wrong bit got through, an expensive lawsuit could be just around the corner. Because of that fear, even if those bits and bytes did not actually comprise anything illegal intermediaries would still be tempted to over-censor or even outright prohibit scads of content, no matter how valuable that content might actually be.
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Note: This post is the first of two parts. The second is here.
As recently reported on this blog, the Court of Justice of the EU (CJEU) was asked to hand down a judgment in a case which is of paramount importance to how the Internet works and users’ daily online activities. In the by-now famous Svensson case nothing less was at stake than the question of whether the provision of a clickable link leading a user to copyright protected works constitutes ‘communication to the public’: an exclusive right under the EU InfoSoc Directive (often called the ‘Copyright Directive’).
To rephrase the question: are Internet users committing large-scale copyright infringements when using and sharing hyperlinks online?
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