You may remember Jammie Thomas; the only defendant whose file sharing (copyright violation) case has actually gone before a jury. Last year the RIAA won their lawsuit against Thomas, who admitted to sharing files, in what was initially a major victory for their argument that simply making files available for download constitutes violation of copyright.

However, on appeal the judge determined that his instructions to the jury in agreement with this position was in error and granted a new trial. This isn’t the first time, or in fact the second or even third, that a judge has reached this conclusion. In fact it’s the standard reading of the Coypright Act that’s been affirmed in case after case.

This poses big problems for the entire framework of the RIAA’s cases. It means they can only claim damages for those files their investigators actually download. If they want damages for a thousand songs it will require a thousand downloads.

In a move that shocks, well pretty much no one, they’ve decided to appeal the decision to grant a new trial. Nobody, most likely including the RIAA lawyers, expects them to win this appeal. In fact it is most likely intended for two purposes, both of which are deserving of a reprimand from the judge at best, and there are many who believe court sanctions would be more appropriate.

The history of these lawsuits shows a clear pattern; besides that of defendants caving in to RIAA demands of course. When defendants go to court and raise legitimate legal questions about either the facts of the case or the legitimacy of the damages RIAA lawyers do their best to drag cases out and avoid arguing the merits of the case in front of a judge.

As usual this RIAA’s appeal is filled with misleading half truths in an attempt to mislead the court. In particular they claim that there’s dissent among the judiciary in previous court decisions which have held defendants liable for merely making copies of a work for unauthorized distribution. What their brief fails to mention, that the decision to grant Jammie Thomas a new case does, is that those defendants were being accused of secondary infringement. In other words they were basically being held responsible as accomplices to copyright infringement.

None of the file sharing lawsuits have anything to do with secondary infringement. Jammie Thomas isn’t being accused of participating in a third party’s unauthorized distribution, which is the issue in each of their supposedly relevant cases. The RIAA is claiming she personally infringed on them. Since they only cite cases where secondary infringement is alleged it’s only reasonable to assume that’s all they can find.

Now for the good news and the problem for the RIAA. There’s absolutely no chance of Jammie Thomas just dropping it. You see unlike your typical RIAA defendant she has nothing to lose by pursuing her case in court and nothing to gain by caving in. She’s already taken the big gamble and lost as big as you can lose. If she doesn’t fight it she owes them more money than she can possiblly pay.

On the other hand the RIAA has now backed themselves into a corner. If they have to argue the case again without their “making available” argument they konw the focus will shift to issues they’ve never had to argue in court. Primarily it will focus on the constitutionality of damage awards that are so high as to be constitutionally questionable.

And it gets better. The labels themselves have argued the opposite side of this point successfully in the past and their only affirmative argument in this case is the minimum amount specified in the law. Although their lawyers are quick to point out that this is different because it’s not based on a calculation of actual damage, there’s no reason to believe the US Constitution makes any such distinction and that’s where the issue lies.

The issue that’s now being raised by a brief filed by Jammie Thomas’ lawyer is that granting an appeal right now would give the RIAA an extra appeal to which they’re not entitled. And why should we care about that? To begin with it means yet another delay in deciding the case; something the RIAA has a history of. Besides the additional cost to this particular case, it also means more delay in getting decisions on the legitimate issues.

At one time there may have been an argument to be made that the RIAA should be given the benefit of the doubt that their appeal is genuine. But that was before their pattern of dragging out cases for years before ultimately dropping them immediately before these serious questions would have been answered by the court. Now we don’t have to assume their intentions. They’ve shown them clearly enough. It’s time to hold them responsible for this history of bad faith courtroom dishonesty and put it in the hands of a judge.

Saying I was wrong would be an understatement. What I didn’t undesrtand then, which has become clear to me since, is that a format like Matroska represents a future for home video where consumers have the latitude to get the features they want. Until that happens we’re stuck with whatever movie studio heads and CEOs of electronics manufacturers see as the biggest money maker.

Why We Need An Open Source Alternative

To understand what’s so revolutionary about Matroska you need to start by looking at the mainstream alternatives. You may already be familiar with some of them, including Microsoft’s AVI (Audio Video Interleave) which is used primarily for MPEG-4 formats like DixX and XviD and the miniDV digital camcorder format. You’ve almost certainly been exposed to the MPEG-2 PS format with uses ranging from VCD and SVCD to DVD and the typical MPEG (.MPEG or .MPG) computer files. Then there’s the MPEG-2 TS format used for digital television and Blu-ray and the newer MP4 container designed for MPEG-4 video and audio.

So what’s wrong with these formats? Actually nothing. The problem isn’t that they don’t do what they were designed to do. It’s that they’re not well suited for formats and applications. For example, any of the MPEG formats, MPEG-2 PS (Program Stream), MPEG-2 TS (Transport Stream), or MP4 are designed with specific types of audio in mind. Although they also include the concept of ‘foreign streams,’ which are non-MPEG formats like Dolby Digital and DTS audio.

Matroska, on the other hand, is completely format agnostic. That means you can play any audio or video format from a Matroska file as long as you have the necessary decoder. To see this in action you need only look at the current trend in TV captures. DTV streams typically include MPEG-2 video and AC3 (Dolby Digital) audio. Due to the amount of hard drive space taken by the video it’s common to see it transcoded to a more efficient standard like AVC. Since Dolby Digital audio is already highly compressed many people feel the small efficiency gain from transcoding to another format like MP3 isn’t worth the quality loss.

Once the video is transcoded there’s one last issue to deal with. What container should it be put in? You could use the MPEG-2 TS container it was broadcast in but that doesn’t make a lot of sense. The same features that make transport streams good for DTV, robust error correction and the ability to store multiple channels in one signal, mean additional overhead that’s unnecessary and undesirable if file size is a consideration.

Looking at the other available alternatives, and considering AVC is an MPEG-4 standard, it makes sense to put the finished product in a MP4 file. Now we run into big problems. In theory this should work fine because AC3 audio can be used as a foreign stream. In reality there are two issues. Since the standard audio format for MP4 files is the MPEG-4 standard of AAC it’s difficult to find software that supports Dolby Digital in MP4. If you happen to overcome that problem you’ll find that equally few media players will be able to read it. In fact you’ll be hard pressed to find software that can even extract AC3 audio from a MP4 file.

Matroska To The Rescue

Enter Matroska. Since there is no official audio or video format specified for Matroska, AVC video with AC3 audio works just as well as any other combination. And if you do some searching on the internet you’ll find that this is exactly what many people are doing. After several years of development Matroska has come into its own, but not because it does something new or revolutionary. On the contrary, it’s because it does something obvious that the “experts” charged with developing new technology have overlooked.

For all its success Matroska still has one major hurdle to clear. While it’s gaining widespread support in the computer world, the same can’t be said for consumer electronics. If you happen to use a media center computer or HTPC this isn’t a problem. But if you’re among the majority of the population who uses a DVD player instead you’re out of luck. As is often the case in the world of home entertainment, support for what consumers prefer has taken a back seat to supporting what content producers think is best.

If you want to see Matroska succeed the most important thing is to use it. The more people do that, the closer we get to making it a mainstream format. If you haven’t already, I recommend taking a look at Matroska. You can find basic instructions for creating Matroska files in my guide on the subject. For help playing MKV or MKA files take a look at my guides on Haali Media Splitter and ffdshow.

After much deliberation behind closed doors a plan is then hatched. Many legal problems, from obtaining confidential information from ISPs to proving actual damages are discussed. Given the extensive legal barriers to gathering evidence legitimately they eventually come to the realization that they actually have no chance of winning.

But wait! One enterprising lackey toiling in obscurity in a legal department has a plan. Instead of relying on the law as written, they’ll simply claim the law supports their plan and use a combination of repetition and obtuse technical and legal arguments to make it appear that the law is on their side. After all, the most important thing isn’t the truth of their case. As anyone who watches Stephen Colbert can tell you it’s all about how true it sounds.

This strategy works for quite a while; perhaps even longer than they expected. But now we’re in another phase of their master plan. In any good farce there comes a time when someone catches on to the silly misdirection and puts it to a test of reason. At this point our antagonist has two choices. For a whle they choose the obvious route of loudly repeating the same arguments. After all, if you repeat your flawed argument loudly enough it looks even more like the truth.

Unfortunately that eventually fails. One by one, as they’re tested in court, their arguments get shot down by judges who take the time to consider the merits of each one instead of buying into the rhetoric advanced by lawyers who are little more than PR mouth pieces for the labels. Now they face a new quandry. What can they do to stem the tide of losses?

This brings us up to right now, and it’s where their strategy goes from psychotically brilliant to completely baffling. Their current dilemma has to do with MediaSentry, the firm that gathers evidence against alleged file sharers so RIAA lawyers can sue them. MediaSentry is under investigation in multiple jurisdictions for operating as private investigators without a license.

In Michigan alone, not only are they being investigated by the state agency responsible for issuing Private Investigator Licenses, they’re also the subject of a complaint by a University they’re targeting in their witch hunt for file sharers.

You might expect them to have another pile of vaguely similar case law to cite. This is how they’ve arrived at previous contortions of the law such as the infamous “making available” as copyright infringement argument. In fact they’ve even used some of this twisted logic in the past to respond to these accusations. In reality though, they’re not making any arguments in court, but instead continue to file lawsuits based on evidence gathered by MediaSentry.

Perhaps they figure they don’t have to worry until actual sanctions are imposed or maybe they’re trying to get as many cases in as possible before being force to stop. Or just maybe they still figure they’re 50 feet tall and bullet proof.

Make no mistake about it. Their behavior may sound like wacky antics when viewed from a distance, but it’s no laughing matter for the people who have settled for thousands of dollars rather than face the possibility of losing a lot more - even if they believe they’ve done nothing wrong. Their comedy of legal errors can’t come to a swift enough conclusion for the people who are already faced with financial hardship to avoid financial ruin.

I’ve written a new guide to help you figure out what, if anything, you need to do. You may need a Digital TV (to analog) converter, an ATSC tuner, or perhaps neither. Even if your TV is already equipped to receive digital broadcasts it’s possible you need a new antenna.

The most important thing is that you think about it sooner rather than later. Despite the availability of government vouchers for DTV converters, there’s no guarantee you’ll be able to find one if you go to a local retailer. If you want to make sure to beat the masses of people who will be scrambling to get ready before (or even after) next February you should have no problems being prepared.

You can also find more general information about Digital TV in another article I wrote for the Nero website.

What’s sad is it’s mostly a matter of greed. The Federal Government is too busy counting the revenue from airwave auctions to consider whether more of it should be spent on getting consumers ready to have their analog TV signals switched off.

Let’s start with the basic economics of production and distribution. After all, the most fundamental part of getting DTV converters in the hands of the people who need them is actually making them and getting them on store shelves. If you want this done on a large scale you have to provide some sort of incentive for everyone in the supply chain to deal with them. That means profit.

So obviously it makes sense to simply figure out the cost to get a converter box to market with minimal profit per unit and issue vouchers for that amount. So of course the government has taken a completely different approach. Instead they’ve decided to come up with what bureaucrats consider a reasonable amount and leave it up to consumers to pay the difference, which amounts to anywhere from $10 - $20 per converter. This isn’t a question of price gouging. In fact its led to a shortage of boxes on store shelves, perhaps due to the lack of profitability.

As far as I know there’s exactly one manufacturer making boxes which can be purchsed for the $40 voucher value (plus applicable sales tax). Those boxes are from Echostar / Dish Network. And they’re not being sold for a profit. In fact Echostar has said they’re losing money on every sale. Instead they’re being used as a PR measure in the hope that it will foster goodwill among potential Dish Network customers.

Unfortunately most manufacturers can’t really use the boxes for that purpose. As a result consumers have to come up with as much as half the value of the vouchers out of their own pockets. That doesn’t even take into account the cost of purchasing a new antenna for people in areas with questionable reception. Meanwhile the FCC is preparing to collect enough money from auctioning off the broadcast frequencies being vacated to pay for all of this - probably multiple times.

Supposedly that was going to be changing. In the 1990s the FCC received a mandate from Congress to stimulate competition for cable STB’s (Set Top Boxes). That eventually led to the creation of CableCARD, a flawed technology that allowed consumer electronics manufacturers to create their own boxes which could work with cable signals. CableCARD technology was interesting, but ultimately flawed. Its usefulness was limited by a lack of support for interactive services like Video On Demand.

Now the cable and consumer electronics companies have embraced an add-on to CableCARD called Tru2Way. It promises to fix the interactivity issues, and allow unprecedented access to the cable system. The problem is that cable companies still have too much control.

For starters, they have so far been able to resist working with competing technology like Verizon’s FiOS on developing open standards. Incumbent cable companies are like the leaders in any market. They object to a real free market because competition makes it easier for others to compete with them.

Verizon has pointed this out in a letter to the FCC. Although they praise Tru2Way as a good idea, they quite correctly point out that a proprietary solution does more harm than good to consumers. Making consumer electronics compatible with cable systems, while leaving other services out in the cold certainly seems to provide an unfair competitive advantage.

If you’re asking what’s wrong with the cable industry protecting their business, consider the situation of people who use media center PCs instead of old-fashioned consumer electronics to watch TV. Despite the supposed openness, only Microsoft has managed to get a license to make their software work with CableCARD. if they were using an open standard like TCP/IP and Ethernet, which is what Verizon is asking for, it would show what an arbitrary, and ultimately anti-competitive decision this is.

They also would’t be able to shut out competition from Verizon, who would be able to design their service to be compatible with the same hardware built into TVs and DVRs for CableCARD and Tru2Way. Don’t get me wrong. The free market is not only good; it’s necessary. But the free market isn’t free if you let the top company control it. Without competition you don’t have capitalism.

Besides the general tip to “take MediaSentry’s deposition, and find out where the truth lies,” he also gives some examples of the way RIAA lawyers have built their cases. It shouldn’t surprise anyone who’s been paying attention in the last few months that what the Plaintiffs represent as an air-tight case is really just a house of cards waiting for a stiff breeze to knock it down.

Readhing through the briefs Mr. Beckerman links to that becomes quite clear. In one brief they call MediaSentry investigators and play up their part in putting the case together. In another they downplay the agency’s role, comparing them to private citizens at a library. Ironically these were both filed at around the same time, and in the same case.

The big problem with the argument that MediaSentry is just using publically available information is that it doesn’t actually answer the question of whether it requires licensing or not. What MediaSentry does is a commercial enterprise where they dig for information on people. Just because information can be gathered without bugging your house or tapping your phone doesn’t mean anything. What matters is your intent and that capacity in which you’re gathering information.

According to one RIAA brief a New York Attorney General actually agreed with their position. Unfortunately for them that was nearly 100 years ago and the law has changed significantly since then. Just being in the employ of an attorney doesn’t mean you can also be a private investigator without a license.

Fortunately the government has given out millions of vouchers that will cover most of the cost for a converter box. Unfortunately for many of the people who are planning to use one of these vouchers they’re going to have a hard time actually finding a converter. In fact if you’re planning to go to Walmart, Target, or Kmart to buy yours plan on checking regularly and buying one quickly before they fly off the shelves.

That’s because there appears to be some supply problems that are stopping most retailers from even knowing when they’ll get more in. When they do come in they fly off the shelves within a day or two. Unfortunately that covers all the local possibilities for a lot of Americans.

The good news is there are options available if you know where to look. Your best option at this point is Best Buy. Besides being one of only two national retailers I was able to find that has them in stock most of the time, they’re also the only one I found that sells converters with S-video capability. They also have a DTV Hotline and Order Center where you can order a converter if they don’t have a store close to you. You can reach them at 1-877-229-3889.

Although they don’t sell S-video equipped boxes, Circuit City and Radio Shack are also pretty good options for buying converters. Like Best Buy, Circuit City has them in stock most of the time. Radio Shack is less consistent, but does allow you to order them in-store when they don’t have them on hand.

The real lesson here isn’t about the retailers, or even manufacturers. The bottom line is the FCC’s voucher plan was poorly thought out, and like most parts of the DTV transition hasn’t had any real oversight to find out how it’s working. The voucher value of $40 is too low to cover manufacturing, distribution, and retailer costs. As a result there’s little or no profit in them and therefore little incentive for anyone involved to make them a priority.

Despite his objections, FCC Chairman Kevin Martin has dropped the ball, and we’ve reached the point where it may not be possible to pick it up again in time to avoid a big mess next February. Then again he probably doesn’t care that much. After all he’s probably on his way out after the next President is elected.

In June of 2003 an appeals court decided not to get in the way of the RIAA’s claim that they DMCA allows them to gather information about internet subscribers with no judicial review. In July of the same year they began what has become a major campaign against P2P file sharers.

What RIAA executives seemed to figure out was that they weren’t going to be able to get millions of dollars from a few companys. So instead they moved on to the next best thing. They decided to get thousands of dollars from millions of individuals. Since then everyone from the Justice Department to the House of Representatives and Senate have gotten behind them.

You see unlike companies, most individuals can’t afford the time or money required to defend themselves in court. In most cases they’re not even familiar enough with the technology or legal issues involved to figure out whether they even have a chance of winning if they do decide to fight back.

his worked pretty well for a while. Then something happened that they weren’t anticipating. A few people not only forced them to make their cases in a courtroom, they actually had the nerve to stick with it after months, or even years of stonewalling and stalling. For a while the RIAA was able to minimize the damage in these cases by dropping any lawsuits that looked like they’d turn out badly.

After nearly two years of circling the courtrooms like vultures they’ve now entered a new phase of the campaign; one they apparently thought they could avoid. Rather than simply sitting back and waiting for defense attorneys to counter RIAA arguments, many judges are putting the ball in the record labels’ court and requiring actual proof instead of just legal theories and technical mumbo jumbo.

The last year has been particularly painful for the RIAA. From repeated judgements requiring them to pay lawyer fees for Tanya Anderson to questions about the legality of their entire evidence gathering process, they’ve found themselves increasingly on the wrong side of judgements.

Even though it’s not a complete defeat, the latest ruling against them may be the first step in a long journey that may lead to the end of their legal jihad. A federal judge has ruled their damage award in a case where someone has actually admitted sharing files will be limited to $200 per song rather than the $750 or more they claim the Copyright Act entitles them to.

Although this particular ruling specifically addresses the issue of “innocent infringement,” where the defendant didn’t realize what she was doing at the time, it opens the door at least a crack for legal debate about the legality of awarding $750 or more for a violation that amounts to less than $1 in real damages. That’s been a cornerstone of cases argued by Ray Beckerman, who is probably the highest profile defense lawyer against RIAA lawsuits.

Mr. Beckerman has been arguing for years that the RIAA’s damage claims violate the US Constitution’s promise of due process, and based on cases where the labels themselves have successfully gotten damages reduced because they were too high compared to the actual financial impact it seems like a sound argument.

Followed to its logical conclusion, his suggestion that damages be capped at less than $10 per song would almost certainly result in reduced revenue for the labels, perhaps to a point where it wouldn’t cover the administrative expenses to collect the money.

In that spirit I submit for your consideration the RIAA’s jihad against consumers. Rather than concentrating on the standard issues of how defendants are bullied into settling lawsuits based on evidence that’s flimsy at best and illegally collected at worst, let’s consider what side effects their legal campaign may have. We’ll concentrate on what it means to the people of China.

The Internet’s growing influence on Chinese culture is at odds with the government’s hard line position on freedom of information. While they realize the internet is an essential tool for reaching their economic goals in both the short and long term, Chinese officials fear its inherent openness, and have gone to extraordinary lengths to restrict its use.

From re-education camps for those supposedly afflicted with internet addiction to the Great Firewall of China, the government clearly understands the fundamental role of information in freedom. They’re doing everything they can to control the information available to and from their citizenry, and no one is more helpful to their cause than the RIAA.

Let’s go a step further and assume that we can truly trust the RIAA not to abuse our personal information gathered in the process of identifying P2P copyright infringers. We’ll even stipulate that our benevolent ISPs would never do anything unsavory with data collected in the course of inspecting all traffic that crosses their networks. Even in this fantasy land there’s no reason to trust the Chinese government with the same technology.

There should be no doubt in anyone’s mind that the reason China is in favor of the sort of packet inspection software the RIAA would like all ISPs to use. The same technology that would allow copyrighted works to be recognized could also any other content the Chinese government deems dangerous. Whether it’s video of government workers beating an ordinary citizen to death or simply a Western movie that espouses the sort of freedom the Chinese people are denied it could be recognized and effectively kept from the people.

If it’s fair for hold P2P companies responsible for contributary infringement by users of their networks, what’s the appropriate punishment for developing software that will be used to oppress literally billions of people?

A EULA is essentially a licensing contract. Software is unique among copyrighted works because it’s often possible to use a single copy on multiple computers at the same time. Whereas something like a music CD has limitations inherent in the medium, software developers must be given some leeway to define the boundaries of the license terms themselves. But that leeway only extends so far.

Like any other contract, its governed by some basic legal principles. Just because a contract, or EULA, claims to take a right away doesn’t mean it has the legal force to do so. Even some standard contract terms are generally indefensible in court.

There are a number of different rationales for this sort of thing. In some cases it’s a matter of one party giving something up while receiving nothing in return. In others its simply a question of rights that you simply can’t give up, even by choice. In this case it seems like there’s a compelling argument that Apple’s EULA is anticompetitive, and perhaps violates antitrust laws.

The biggest question is likely to be what the purpose for limiting their customers to using Apple hardware for OS X is. A look into Apple’s past reveals the likely answer. Before Steve Jobs returned to the company in the late 1990s they experimented with licensing the Mac’s design to third party companies. These companies were able to produce Macintosh clones, and due to low licensing costs they could (and did) undercut Apple’s prices.

Since at that time Apple used very specialized hardware, rather than the generic PC components used for their current Intel platform, they were able to exercise a great deal of control by simply refusing to sell the system ROMs used on Mac motherboards. When Jobs returned to Apple he simply eliminated the clone program for the next version of the Mac OS and that was that. At least until Apple switched to the current Intel platform, which they share with the standard PC.

Is price the only reason Apple is scared of clones? Probably not. After all it’s reasonable to assume that many of Apple’s current Mac customers would continue to be very loyal. What seems more likely is that they’re afraid of someone else becoming the public face of the Mac. Even though it would probably result in more sales for Apple, an endless supply of readily available clones could easily relegate Apple to a sort of prestige brand, with others delivering the computer to the masses.

It would also wrest a lot of control over the company’s public image away from Steve Jobs. From the iMac to the iPod to the iPhone it’s obvious that’s an important point for him. Why do you suppose Apple has made a point of not including support for Sun’s Java or Adobe’s Flash on the iPhone. It’s not because there isn’t demand or it can’t be done. That simply puts too much control over an Apple product in the hands of another company.

In legal terms that creates a problem. The entire point of this provision of the EULA is control. Specifically it’s to keep other vendors from competing with Apple. Now believe it or not that’s not automatically a problem. Except in this case it might be. You see EULAs have one important feature that distinguishes them from most contracts. They’re almost completely one-sided. The software vendor controls them completely.

The amount of power each party to a contract has is another of the basic considerations that determines whether a particular item can be enforced. When one party dictates all the conditions they have to be careful that the contract isn’t completely one sided. The more the contract (or EULA) favors the party writing it, the more likely a judge is to rule against terms favorable to them and unfavorable to the other party.

It’s not actually clear that requiring Apple hardware to be purchased to run OS X is actually favorable for Apple. The benefits of increased sales, and perhaps even becoming a serious threat to Microsoft in the OS market might outweigh the advantages to their current monopoly. What does seem clear is their intent. They believe its in their best interest to avoid free market competition. Whether it is or not it seems equally clear its not in the public’s interest and shouldn’t be allowed.

Specifically they have two basic problems. The first is the willingness of defendants to fight back. Rather than simply paying the RIAA whatever they ask for to settle, people are insisting on their day in court. As a result the government has started catching up to the RIAA’s tactics, and the more questions that get asked the worse the answers sound.

Perhaps the biggest Achilles heel that’s come to light is MediaSentry. The RIAA pays MediaSentry to provide information which can be used to get subpoenas and eventually identify defendants for lawsuits. The problem is nobody but MediaSentry and the RIAA knows exactly how this is done.

MediaSentry has so far managed to operate without any regulation or government oversight, while also not being required to divulge their investigatory techniques in court. That looks increasingly like it’s going to be changing. The latest assault is coming from Michigan Central University.

University attorneys are asking the state’s Department of Labor & Economic Growth to issue a Cease and Desist Order, requiring MediaSentry to become licensed private investigators before pursuing any further action in Michigan. You can be sure MediaSentry and the RIAA will fight the request, but that may not be a bad thing.

After all its hard to imagine anything more dangerous to the RIAA’s cases than forcing their agents into the bright light of due process.

Actually I’ve seen so many analyst predictions that I tend to simply tune them out. Obviously not everyone ignores them though, so let’s address that issue as well. A good analyst can be an invaluable tool for running your business. Not because they can tell you what will happen in the future, but because they can explain what happened in the past.

The fact is no one can predict the future. It seems like an obvious thing to say, but clearly there are people everywhere who think it’s possible. How else do you explain the way so-called expert opinions about what’s going to happen in the coming months and years get treated like the gospel truth.

Rather than looking at the obvious reasons why no one can tell if Blu-ray will ever become the dominant home video format, let’s look at things from a less hypothetical point of view. What we’re going to consider is the expert analysis of the format war between HD DVD and Blu-ray. Specifically we’ll look at a major development all the experts got wrong.

In 2007 the focus was on winning the format war. It was something of an industry assumption that the only thing standing in the way of an HD disc revolution was the confusion caused by having two formats. And what was the rationale for this conclusion? Simply that DVD appeared to be a flop early on.

That’s right. Since DVD looked like a flop for a couple of years and so did Blu-ray that must mean Blu-ray will enjoy the same success as DVD. That’s not just short sighted. It’s laughable. Consumer electronics history is filled with technologies that appeared to be flops in the beginning - and were. Perhaps the closest parallel to Blu-ray was Super VHS.

S-VHS offered superior image and sound to standard VHS videotape. The VCRs cost more, but also offered improved playback of standard VHS tapes. Of course to get the full benefits you’d need a fairly new TV that many people couldn’t afford, and the media was more expensive. And of course the similarity to standard VHS made it confusing to consumers. It remained a niche product until the demise of VHS at the hands of DVD.

Fast forward to the beginning of this year. After a good year of constant promotions, subsidized disc manufacturing, and generally unsustainable expenditures from Sony to promote Blu-ray it finally defeated HD DVD. And yet sales tanked shortly afterward. Movies have slowly continued to gain in popularity, but aside from the PS3 there isn’t a single Blu-ray player that could be deemed a success by any measure.

Like S-VHS it confuses consumers, many of whom are very happy with what they’re getting from the DVD technology they still regard as new and cutting edge. The vastly improved picture can’t be appreciated on the older TVs many people have, and there’s no move among consumer electronics companies to attain market saturation by introducing real budget models. It also features improved audio that requires equipment most people don’t have and won’t be buying.

On top of all that the world economy has taken a huge hit in 2008, something else analysts couldn’t really predict (although to be honest they had to see it coming some time). Despite a likely increase in home video sales as people stay home en masse, it will be difficult to sell new players to people struggling to pay their bills.

Now does that mean that Blu-ray will suffer the same fate as S-VHS? Absolutely not. When I say no one can predict the future I include myself. Blu-ray is clearly better supported and has more marketing power behind it than S-VHS ever did. But the fact remains its at least as valid a comparison as DVD.

The way things have played out this year makes perfect sense in hindsight, but wasn’t predicted accurately by anyone. With that in mind are you willing to believe the same people who didn’t predict where we are now when they pull more future figures out of their nether regions?

Sony Pictures Home Entertainment’s Tim Meade is claiming Blu-ray will account for 25% of “global sales value of BD movie discs as a percentage of all types” at the end of this year, and in 2011 more BDs (Blu-ray Discs) will be sold than DVDs. Sounds impressive doesn’t it? Until you look closer at what he’s actually saying anyway.

I can’t figure out exactly what he means by “global sales value of BD movie discs as a percentage of all types.” He said that last year it was 9%, which means he can’t be referring to annual revenue. In the US, where Blu-ray had its strongest performance in 2007, Blu-ray and HD DVD combined were outsold more than 50:1 by DVD. I haven’t been able to find any global figures, but they would have to be even lower.

Looking closer it seems that he’s not even talking about an entire year for either figure, but rather some other unspecified amount of time. That would make some sense considering both figures would probably include Christmas and post-Christmas sales when you’d expect new (and expensive) technology to do particularly well.

You could also argue it doesn’t matter what period of time he was referring to. Once you start cherry picking your figures you’re as much as admitting the big picture doesn’t back up your conclusions.

But a few lawyers haven’t just rolled over. One notable example is Ray Beckerman. Despite an occasional tendency for hyperbole, through his blog, titled Recording Industry vs The People, he’s spent many hours shining the light of “guess what they said now” on record label arguments.

He’s also been on the front lines, asking questions the RIAA would rather you not hear the answer to, like just how their contractors conduct investigations. Earlier this year he was invited to share his opinions with judges across the country in the American Bar Association’s publication, The Judge’s Journal. Not surprisingly he accepted, and thanks to the ABA you can read the article for yourself on his webpage.

If you don’t want to read the article here’s the CliffsNotes version. Mr Beckerman lays out in detail a list of problems with the RIAA lawsuits, focusing primarily on how their attorneys have used subterfuge and sleight of hand to make it appear that they have enough evidence to begin the evidence gathering process. Once this has started, he argues, defendants generally have no choice but to settle out of court because they don’t have the resouces to wage a protracted court battle. And in those cases where someone does fight they face very convincing shadow puppets that look a lot like evidence, but really aren’t.

Mr. Beckerman also explains that it’s in the judges’ power to correct the abuse of our Federal courts by the RIAA, primarily by questioning their many ridiculous claims instead of assuming they’re telling the truth. He also explains how the RIAA’s John Doe cases, where the lack of defendant participation in almost the entire case leads to a lack of adversarial checks on the plaintiffs, needs to be actively corrected from the bench.

He also makes an excellent point that anyone who sides with the RIAA would do well to consider, saying “if the court does not understand the technology well enough, it means that the plaintiffs have not pled their claim well enough and their complaint should be dismissed.”

It’s a somewhat long read, but well worth the time. I highly recommend reading it when you have the chance.

But no law exists in a vacuum. Every right you have can potentially be canceled by someone else’s. Take free speech for example. The First Amendment to the Constitution grants every person the right of free speech, but it’s not universal.

If you yell “fire” in a crowded theater you can be arrested. But why? Don’t you have a right to say what you want? Well yes - and no. By yelling “fire” under this circumstance you’ve put other people at risk. Now you’ve infringed on their rights.

Even though there’s no right to be safe written into the Constitution it does exist in a legal sense. In fact there are many rights that were assumed by the Founding Fathers, and therefore they didn’t feel the need to codify them as law.  Another example is privacy.

While there’s no Constitutional prohibition against it we can also assume that other people don’t have the right to intrude on your privacy. To be sure there are places we have no right to privacy. If you walk down a public street or enter a public building and someone listens in on a conversation you’re having you can’t sue them for violating your privacy. But if they sneak into your living room and put a microphone in a light fixture it’s a completely different matter.

So why would we give record labels or movie studios the right to filter internet content? In order to do that they first have to “read” the data you’re sending or receiving, and when you send a transmission directly from your computer to someone else’s across the internet you have a reasonable expectation of privacy. Under normal conditions there’s no reason to believe that a third party will have access to your computer’s “conversation” with someone else’s.

The labels and studios, and the lawmakers they’ve bought and paid for, assure us that there’s a pressing need to protect these companies’ rights. They have the right to protect their copyrights and it’s important we help them. And to be fair there’s some truth in that, which is why we have copyright laws. But the people also have a right. It’s a right so fundamental and obvious the framers of the US Constitution didn’t even think it needed to be specifically mentioned.

If we’re going to intrude on that right shouldn’t it be for something more important to our country than an extra couple of million dollars for a record label?

Proving unauthorized distribution can be extremely difficult. There’s no way for an observer to prove that your computer is transferring a song to someone else’s. The obvious solution is to have investigators download the songs. But RIAA attorneys say it’s simpler than that.

In fact, they say, simply offering to distribute a copyrighted song is infringement. They give a number of examples of court cases where various judges have made such rulings, and have even been able to get the US Department of Justice to support this position. They also point out that Congress seems to be under the impression that this is what the law says.

There’s only one little problem. The law doesn’t say what they’re claiming, and an overwhelming amount of case law, all the way up to the Supreme Court, says so. The law clearly lays out what constitutes distribution. It’s not offering to distribute, or “making available” as it has come to be known.

In the case of Tenise Barker this particular issue has been a major sticking point. In April she finally got a small, but important victory in here nearly three year fight against the RIAA when the judge ruled that simply making files available isn’t copyright infringement. It requires that there be a transfer of copyrighted material.

Judge Kenneth M Karras wrote in his decision, “because Congress did not expressly equate the act of “offering to distribute . . . for the purposes of further distribution” to the act of “making available,” Plaintiffs’ allegations – insofar as Plaintiffs wish to hold Defendant liable for acts of infringement other than actual downloading and/or distribution – fail to state a claim.”

So if they have evidence of an investigator downloading a copyrighted file why does this matter? It’s simple economics. If we assume that only a single download for each song listed in a complaint is alleged that puts the actual damages at less than a dollar per song. But if you look at the damages the RIAA is asking for you’ll quickly realize that it’s thousands of times this much. If it weren’t that high it wouldn’t be worth the cost to sue. Not to mention that for a few dollars defendants would be much less likely to settle out of court.

Now imagine going before a judge and asking for damages of $1000 because someone cost you $0.70. That’s basically what the labels are doing, except it’s several thousand dollars for each song. It gets a lot harder to argue for those kinds of damages without the making available argument. Now that it seems to be off the table it will be interesting to hear the next arguement they come up with to justify such a severe penalty.

In fact that honor goes to a quote from Eric Garland, an executive for a media analysis firm. Mr Garland said “If the movie’s a stiff, and word gets out too early that it’s a stiff, it’s devastating to the business model.”

Surely he must be kidding right? I mean nobody could possibly have a business model that revolves around their product making just as much money when it’s bad as when it’s good? Could they?

That’s exactly the problem with the entertainment industry’s claims that copyright infringement loses them money. They’re so used to calling the shots that they find it inconceivable that they don’t. The answer, in the warped mind of a music or movie executive, is to change the laws to put themselves back in charge. The problem with this solution is that laws don’t change reality. They reflect it.

The history of copyright law is clear. New technology comes along that disrupts an existing business model. The people making money off that model complain loudly to anyone willing to listen that our entire way of life is under attack. They attempt to use new legislation and/or the courts to ensure their business model’s survival. And in the end they always fail.

Technology that disrupts one business model invariably creates another. And the new one is worth more money to more people. That’s just the way it is. There is no such thing as an inalienable right to make money. If your customers tell you your product isn’t worth what it used to be you either need new customers or a new product. You don’t get to tell them they’re wrong.

The bill uses a two pronged attack to go after the evil of piracy. On one hand it would increase penalties for infringement. Why this is necessary seems to be a complete mystery since the penalties for businesses are routinely below the statutory maximum for damages.

Some people point to the rash of lawsuits brought by the RIAA, and tell you that these penalties would help deter infringement by individuals. There are two problems with that line of reasoning. The vast majority of those cases end in settlements of just a few thousand dollars; far less than the current statutory maximum. And RIAA attorneys admit that the asking for the maximum penalty when they actually have to go to court is based purely on how the law is worded rather than any calculation of damages. On the other hand the higher fines could potentially aid them in bullying victims, er defendants into settling.

As with other recent legislation, this bill would also give the Department of Justice responsibility for pursuing civil lawsuits against IP infringers. Even if you completely ignore the fact that civil cases on behalf of private companies are by definition not the business of government prosecutors, it’s hard to see how taxpayers can afford to provide attorneys for wealthy corporations.

Warner Brothers just had a record weekend at the box office with “The Dark Knight.” Meanwhile people across the country are struggling to keep a roof above their heads and food on their tables. I’ll be happy to pay for their lawyers as soon as they agree to cover my mortgage.

The real question we should be asking is exactly how society benefits from a dead man’s estate controlling what can be done with the contents of decades old novels. Despite what people who make vast fortunes off works like The Chronicles of Narnia would have you believe, intellectual property isn’t some kind of natural and obvious right. It’s something we made up. And we made it up for a purpose.

The entire purpose of copyright is to give authors a reason to continue writing new books, articles, and other works. No matter how long Mr. Lewis’ estate controls his writings or how much money they make from them he will not be returning from the dead to start a new book.

In addition to their basic subscription service, which amounted to a rental plan, Yahoo Music Unlimited also offered customers the option to pay extra to buy songs. Unfortunately even buying music through the service was still really just renting it. You see these songs came with DRM, meaning they can only be played by a computer that’s been authorized by a license server operated by Yahoo. Even though the subscription business was transferred to Rhapsody, Yahoo still had to maintain the license server that allows new computers to be authorized.

Now it seems that Yahoo has decided the license servers are too much trouble, or more likely too much money to maintain. Instead they’ve decided to shut them down at the end of September. Now this doesn’t mean people will suddenly be unable to play their music. What it does mean is that no new computers can be authorized to play the songs that customers payed $0.79 each for. If you happen to be one of these lucky people and need to replace your computer, or even reinstall Windows after September 30 you won’t be able to play your music any more.

They’re not the first company to try this. Ironically they were preceded by Microsoft, the company that makes the DRM and recently tried to buy Yahoo. If that had happened we probably could have avoided this situation since they recently reconsidered their decision after seeing how upset their customers were. They’ve now decided to wait until at least 2011 to make a decision.

In reality Yahoo will most likely be pressured into doing the right thing and keeping the servers running. But that doesn’t really solve the bigger problem. The problem isn’t that Yahoo is planning to shut down the license servers. It’s that they can.

When a company offeres a product for sale you have a certain preconceived notion of what that means. It means that whatever you’re buying is yours forever, or at least the lifetime of the product. But when you buy music, movies, software, or anything else that’s “protected” with DRM that’s no longer guaranteed. Your ability to use the product that you bought is completely at the mercy of the DRM, and in a case like this that really means it’s compltely up to Yahoo.

You don’t have to look hard to find good arguments why DRM is a bad idea. It’s no conicidence that every major record label now offers DRM-free music downloads. DRM is confusing to consumers and expensive to implement and maintain. As we’ve seen in both the Microsoft and Yahoo cases the expense is high enough to make angering customers seem like an acceptable tradeoff - at least until they show you how high the price in public opinion can really be.

Of course there’s an easy resolution for the whole thing. Simply trade the DRM laden music files for new DRM free versions. The problem is Yahoo can’t do that without either spending more money than it would cost to keep the license servers going or getting permission from the record labels. And of course the labels have no interest in such a deal because they know it’s Yahoo who will be blamed for the whole mess. And maybe that’s fair.

The only real solution is to stay away from DRM. Or at least don’t be fooled into thinking you’re buying something with it. Laws in the US and many other countries are quite clear that you have no right to bypass DRM, even if it means you can no longer access yoiur own property. As long as the company you bought it from determines whether you can access your own property it’s not really yours anyway.

Not surprisingly it only took a few months for the first chinks to appear in the AACS armor. At this point one of Blu-ray’s other supposed advantages over DVD came into play. Despite claims to the contrary, one tihng Blu-ray’s developers knew from the beginning was that no encryption can work forever. The solution, in their minds, was to mandate from the beginning that additional DRM measures could be added after the product’s release. They figured it was just a matter of staying one step ahead of the enemy.

And how has that worked out for them? About as well as you would expect, which is to say not at all. There have been short periods when some new releases couldn’t be decrypted except by official hardware or software, but on the whole these have been trivial. You might think this would lead Blu-ray’s backers to give up. You’d be wrong. Instead they continue to work on new ways to thwart copying. Presumably they expect to keep doing this as long as it takes to eliminate the threat of copying discs.

Blu-ray’s DRM, can theoretically change as many times as necessary to remain effective. The problems with this approach are numerous. Here are just a few obvious ones.

Inconvenience

We’ve already seen that adding new DRM can cause problems for people who already own players. People who owned Samsung Blu-ray players and bought the movie “Fantastic Four Rise of the Silver Surfer” right after it was released found that out the hard way. The movie wouldn’t play on most Samsung players until the company released a firmware update - a week later!

They were fortunate that the number of people affected was small. But that’s not a matter of planning, but rather timing. Every time they make a change to Blu-ray’s DRM they risk this happening. What do you think will happen when a problem like this affects a million people or more?

Hardware

In order to update a Blu-ray player to work with new DRM something called a firmware flash is required. Firmware is basically programmable hardware. Although it can be programmed over and over again, this requires a special process called flashing. Unfortunately flashing is inherently risky. Modern firmware is written to something called an EEPROM, or Electrically Erasable Programmable Read Only Memory. The first step to reprogramming an EEPROM is to use an electrical current to erase it.

You may have read somewhere that flashing your hardware isn’t recommended unless it’s necessary. The electrical charge used to erase it is the reason for this warning. In order to avoid accidentally erasing the chip, the electrical signal that erases an EEPROM is significantly more powerful than what runs through it during normal operation. Although EEPROM flashing has become much more reliable over the years there’s always a chance that it will result in damage to the hardware.

The more flashing you do, the more likely it is you’ll damage your hardware. That’s assuming your hardware is relatively defect free. A single DRM upgrade could easily result in tens of thousands of broken Blu-ray players. Not exactly a recipe for success.

The other problem with flashing is getting the update to your Blu-ray player. Although soon every Blu-ray player sold will include an ethernet jack, that only helps if you actually have it connected to your network. There are a lot of people for whom that would be difficult at best.

Firmware updates also provide a weakness of their own. By including instructions for programming the firmware, as well as the information to be programmed, hardware manufacturers are providing a blueprint for the hardware. Given enough time and resources, both of which are available in abundance to anyone with an internet connection, you would expect the updates to be reverse engineered, resulting in the new DRM being quickly compromised.

Cost

While all of this is going on the cost will continue to mount. Developing increasingly complex DRM will be an on-going task for well paid personnel. As the costs mount they’ll be passed on to consumers. For a format struggling for consumer acceptance. Those working to break the DRM clearly have the advantage. It’s time to give in and concentrate on selling movies. There’s no future in selling DRM.

If you have been living on another planet for the last few years it may come as a surprise to you that the CD market is on life support. It has been replaced by downloads, both legal and illegal. With music provided by the record labels under assault from free music on P2P networks and bargain basement downloads from Russian MP3 sites it has become obvious to anyone who is not a record label executive that consumers simply are not willing to pay high prices for their music.

Since the labels are not doing anything to find a viable alternative to the old system, artists have started taking the initiative to find it for themselves.

Last year Radiohead made headlines by giving their latest album away as DRM-free MP3 downloads with an option to pay for anyone who wanted to. Several people have speculated on how profitable it really was, although the only people who really know - the band themselves - are not talking.

Regardless of the amount of money they made I can tell you for sure that the giveaway attracted at least one listener who would not have paid for the album. As with Paul Westerberg, I am familiar more with Radiohead’s name than any of their music. I am also now a casual listener, something that never would have happened for the cost of a CD or a handful of songs from iTunes.

A few months later I also downloaded a free release from Trent Reznor. Once again an artist convinced me to listen to music I wouild not have bought a CD to hear. Unlike the Radiohead experiment it was just a portion of the entire work, with the entire thing available for a reasonable price. You could get it in a variety of formats, most of which were available for download at a price of just $5. Others were priced as low as $10 for a 2 CD set with a booklet, all the way up to a $300 limited edition package autographed by Reznor.

I downloaded the free tracks, but decided against paying the $5 for the whole package. Once again though, I listened to music I would not have bought, and he apparently did not miss my money since it sold well enough for him to release a special “thank you” album a couple months later. The $300 version sold out in less than two days.

That brings me to this evening. I was sitting at my computer catching up on some news and I read about Paul Westerberg releasing a new album called “49:00″. I was never a big fan of his, or even his former band The Replacements, but I am a big music fan. I usually spend all day listening to music, and I am always on the lookout for more.

As I have gotten older I have found it increasingly important to find things I have never heard before. One thing I learned from being a musician is just how many great artists there really are in the world if you can just find them. The problem is I am not willing to spend $20, $15, or even $5 for an album just to find out how good somebody is. But $0.49? I will pay that without thinking about it if I think there is a chance to get good music.

As it turns out “00:49″ is better than I was expecting. It is actually an entire 49 minute long album put together as a single audio track. The songs sort of run into each other, which sometimes gets a little annoying, but honestly I got way more than my $0.49 worth. I also found out I kind of like Paul Westerberg. I will have to listen to it a few more times, but I could see myself paying to see him live.

For most artists that is what albums are all about.

They’re counting on the judge accepting their interpretation of a secton of the DMCA intended to prevent abuses of the takedown process. Takedown requests are a tool for copyright holders to have infringing material removed from the internet while shielding service providers from liability. It requires the party claiming ownership of a work to send an official legal notification that they believe there is infringing material which should be removed, such as the video in this case.¹

The takedown notice is a legal document in which the copyright holder states “under penalty of perjury” that the material is infringing.¹ If a service provider refuses to comply with the takedown request they become responsible if there is actual infringement taking place. There’s also an appeal process under which the content can be restored.

The DMCA also stipulates that “Penalties are provided for knowing material misrepresentations in either a notice or a counter notice. Any person who knowingly materially misrepresents that material is infringing.”¹ A material misrepresentation simply means stating a fact that isn’t true (ie lying).

There doesn’t appear to be much room for interpretation in this case. The video in question was a toddler dancing. The supposed infringement involved a short segment of a Prince song which can barely be heard in the background of the 30 second video. It clearly passes all the tests for fair use. In fact, except for the title of the video, ‘Let’s Go Crazy,’ you might not even be able to figure out what song is playing at all.

Two questions must be answered here. First, was there any reason to believe this was infringement. Since fair use is largely defined by case law rather than actual legislation there’s often room for debate. But as a layman with significant knowledge of copyright law I’d have to say not in this case. And if your job is determining these things there’s no excuse for knowing less about copyright than I do.

Once you’ve established that there isn’t any reasonable way for Universal’s legal department to mistake this for infringement you have to look to the DMCA and find out what liability they have. The meaning of “Any person” would seem to include lawyers, copyright holders, and well any person. In case it’s not clear that it includes everyone, copyright holder or not, you should also consider what ramifications there are if they’re not included.

If copyright owners can falsely accuse people of copyright infringement, knowing that it’s a false charge, it becomes the responsibility of everyone except the corporate lawyers to understand the law. Otherwise there effectively is no fair use. Unlike the rest of the population, lawyers have a professional responsibility to know the law. Clearly if they’re swearing something “on penalty of perjury” even when they know it to be false shouldn’t they be punished? Otherwise how can we claim to be holding them responsible for anything

¹The Digital Millenium Copyright Act of 1998, U.S. Copyright Office Summary p12