CNET

You may have seen some recent headlines proclaiming ‘Airbnb Is Illegal In New York’ (see, e.g.1, 2, 3, 4), but these overstate what has happened.  On May 13, Nigel Warren, a user of Airbnb, a startup that facilitates apartment sharing, was found to violate a New York regulation (§ 27-2004(a)(8)(a)(1)(A) of the Administrative Code of the City of New York) by an administrative law judge.  This is just one notice of violation with a $2,400 fine for one Airbnb user, although more enforcement is possible.  According to the New York Times, “the city still seems only to be conducting inspections at apartments where neighbors have complained about the comings and goings of all the random strangers.  Similarly, Fast Company says “the city only enforces the rule when a complaint is filed,” and so Airbnb users may be able to continue renting rooms in their home, which often generates five figures of supplementary income, and hope they’re not targeted.

Thus, while headlines blaring “Airbnb Illegal” may overstate the case, its NYC users do face new uncertainties.  CNET explains the background:

The New York case is centered around a 2011 law that makes it illegal for New York residents to rent out a property for less than 29 days. It was originally aimed at landlords who bought up residential properties and turned them into hotels.

That is very different than what Airbnb users do, which is to occasionally rent out unused rooms in their primary residence.  Airbnb’s statement to CNET explains that the New York law was written to curtail another practice, and requests that the law be ‘fixed’:

This decision runs contrary to the stated intention and the plain text of New York law, so obviously we are disappointed. But more importantly, this decision makes it even more critical that New York law be clarified to make sure regular New Yorkers can occasionally rent out their own homes. There is universal agreement that occasional hosts like Nigel Warren were not the target of the 2010 law, but that agreement provides little comfort to the handful of people, like Nigel, who find themselves targeted by overzealous enforcement officials. It is time to fix this law and protect hosts who occasionally rent out their own homes. Eighty-seven percent of Airbnb hosts in New York list just a home they live in — they are average New Yorkers trying to make ends meet, not illegal hotels that should be subject to the 2010 law.

Airbnb has hired New York lobbyists who are trying to have the law changed by June 21, the end of the New York legislative session.

The large majority of Airbnb listings are outside of where most New York hotels are, which suggests they don’t directly compete with that market, but rather create an entirely new market, also driving revenue to more local businesses.  According to CRAIN’S,

with about 87% of listings outside the swath of Manhattan between 14th and 59th streets, where most hotels are bunched, Airbnb directs dollars to neighborhoods that don’t usually see the spending spoils of the $55 billion-a-year tourism industry.

This type of economic impact should be encouraged, rather than be discouraged by laws written for a different purpose.

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We’ve written several posts on the DISH Hopper dust-up, but to recap: CBS owns the popular tech site CNET, whom it forced to retract an award given to the best product from the recent 2013 Consumer Electronics Show (CES).  Why?  Because CNET granted the Best of CES award to the DISH Hopper product, a product that CBS and other networks were suing DISH over, on the grounds that its service constituted copyright infringement.  As Rob described, initial reports implied this came from the legal division, which prompted a round of ‘typical lawyer nonsense’ eye-rolling.  Subsequent developments indicated that the decision had not come from the Wet Blanket Department at all, however, but rather directly from CBS CEO Les Moonves.

DisCo has yet to give this kerfuffle any legal analysis, and this post admittedly only scratches the surface.  At Hollywood Reporter, Eriq Gardner previewed the questions that IP and tech watchers have been pondering: does CBS meddling in CNET reporting now undermine its ability to argue that it should not meddle in CNET reporting on other subjects?

The prime example, noted in Gardner’s article, involves Download.com.  After CBS acquired CNET along with CNET’s website, Download.com, CBS was sued for making available peer-to-peer software, including BitTorrent applications.  If you do not immediately grasp the connection between CBS and P2P apps, worry not.

In short, the allegations in the suit are:

  • CBS controlled CNET, which ran the website Download.com.  Download.com is a software distribution platform, ancient by Internet standards (1996), which reviews and makes available freeware, shareware, and trial versions of software.
  • Among the thousands of applications that Download.com made available were file-sharing applications, and among the applications that Download.com editors reviewed were BitTorrent applications.
  • Individuals downloaded and then allegedly used these BitTorrent applications to infringe copyright.  And thus CBS should be held responsible, the theory goes, for those end-users’ infringement.

Presently, judge-made rules do allow for plaintiffs to hold non-infringers responsible for the acts of other infringers under certain circumstances: this is called “secondary liability.”  In these special cases, judges have decided that it is in the broader interest of protecting copyright to penalize non-infringers for the misconduct of third parties.  (Thus, this notion is sometimes confusingly referred to as “third party liability.”)

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If CBS isn’t already wishing it could hit the rewind button on its attempt to deny publicity to DISH Network’s video recorder, the company will be grasping for the remote soon enough.

The festivities began last week, when editors at CBS’s tech-news site CNET had voted to give DISH’s updated Hopper DVR–which can automatically skip ads in recorded prime-time network fare–its “Best of CES” award. CBS is not so fond of that feature, having already sued DISH over it, and forced CNET to give the award to somebody else.

That’s gone over about as well as you’d expect. CNET writer Greg Sandoval tweeted his resignation on principle (“I no longer have confidence that CBS is committed to editorial independence”), and editor Lindsey Turrentine wrote that CBS executives banned the site from saying what had just happened.

Daniel O’Connor unpacked the foundations of this foolishness yesterday, and a legal analysis by Matt Schruers is forthcoming [EDIT: Matt's post is now up]. Here, I’m going to tee off on two toxic defenses CBS has offered for its conduct, just in case any other media conglomerate wants to follow its example.

(Disclosure: DISH Network is a member of the Computer & Communications Industry Association, which hosts this blog.)

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On Friday, news broke that CNET was forced to pull its consideration of DISH’s awesome new Hopper set-top box from consideration for its “Best of CES” award because of a legal fight between DISH and CNET’s parent company, CBS.  At least, that was the pretext.  More likely CBS nixed the Hopper from receiving its rightful acclaim because — as another network, FOX,  jointly suing DISH with CBS said — the networks fear that DISH’s Autohop “will ultimately destroy the advertising-supported ecosystem that provides consumers with the choice to enjoy free, over-the-air, varied, high-quality primetime broadcast programming.”

CNN later reported (and CNET confirmed with a disclaimer) that CBS had hastily laid down a policy that prevented CNET from reviewing the DISH Hopper because it was involved in litigation with the company surrounding the product.  Unfortunately for CBS this ex-post legal rationalization did not completely ring true because CNET had already reviewed the DISH Hopper at CES and given it glowing praise.

As a quick summation of the legal controversy, the major networks filed suit against DISH’s Autohop technology earlier in the year for letting customers automatically cut commercials out of their primetime network television recordings.  Networks argued that this was a violation of copyright law and an affront to their hallowed business model.  DISH countered that TV viewers have been skipping commercials since the dawn of the commercial, and the Hopper just gives viewers more control.

Here at DisCo, our copyright law guru Matt Schruers discussed the Autohop technology in the context of prior technology aimed at giving users the ability to “tune out” commercials and noted, “your business model won’t last if it demands that the rest of the world order their affairs around you.”  The arguments of the networks are also un-refreshingly similar to the arguments used by the major movie studios in their attempts to make the VCR’s predecessor — the Betamax — illegal.

By today the situation was spiraling further out of control.  First, Greg Sandoval, longtime tech reporter and one of CNET’s most prominent bylines, resigned citing the dishonest way in which the situation was handled.

Then Lindsey Turrentine, an editor at CNET, revealed not only that (1) DISH had won the original vote for the “Best of CES” award, but also that (2) CBS prevented CNET from revealing that fact in its disclosure, forcing the tech news outlet to stick to the official, misleading script which was, “The Dish Hopper with Sling was removed from consideration due to active litigation involving our parent company CBS Corp.”  And not only had the order come down from CBS to meddle with the CNET’s editorial integrity, but it had come from CBS CEO Les Moonves himself.

In a final twist, the implications of which will be covered more extensively by Matt Schruers in a later DisCo post [EDIT: Matt's post is now up], CBS had actually used its “editorial hands off” policy to defend itself from being implicated in a (questionable) lawsuit brought against CNET for facilitating copyright infringement.  Given that CBS now has admittedly exerted direct editorial control in this instance, it is quite possible that future lawsuits will target CBS for the content put out by its affiliates, as lawyers will argue that in not editing future content CBS is exercising editorial control as it has now bulldozed the Chinese wall it used to defend itself in the past.

All in all, this was a myopically short-sighted attempt by CBS to censor editorial comments about a product that its own affiliate said was awesome.  (CBS must agree, seeing as they let CNET post the original review, right?)

In fact, one prescient company perhaps summed up the need for editorial independence best when it argued that forcing parent companies to take editorial control of its news outlets “would create grave uncertainties for writers and publishers — including search engines, web encyclopedias, blogs and most technology journalists — that seek to communicate truthful information about emerging technologies.”  Who was that company you might ask?  It was actually CBS defending itself against the above-mentioned charges accusing it of facilitating copyright infringement through articles published on its tech news affiliate, CNET.

And to would-be censors out there, take note that in attempting to censor something you actually increase its PR exposure, as this controversy has generated far more news than CNET’s “Best of CES” list ever would have.  Another clear instance of the Streisand effect.

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