There's been quite a rumble in the publishing community in the wake of this week's ruling by the U.S. District Court in Arizona in favor of Pamela and Jeffery Howell, defendants against a lawsuit raised by the Atlantic Recording Corporation for their alleged role in copyright infringement. Atlantic, with RIAA backing, was seeking a summary judgment against the Howells claiming that they had put music files on the KaZaa file sharing service, and by doing so violated Atlantic's rights to distribution under copyright law. That word "distribution" turns out to have become the pivotal point in a key decision that puts copyright law in its true perspective.

The key finding by U.S. District Judge Neil Wake is a simple but fairly profound observation. Wake notes that although statues and court precedents state clearly that a distribution of content is a publication, not all publications are distributions. Specific to file sharing, the defendants claim that they did not put any music in the KaZaa file folder designated for file sharing - and that the record company's claim that more than 4,000 files had been designated by them for download was due to a glitch in the KaZaa software that made their music files, present in a folder not designated for sharing, identifiable by others in the KaZaa network. So although these songs were made to look as if they were available for distribution by KaZaa, they were not by any intent of the defendants. The Howells also pointed out that their computer was accessible by others who could have made their files exposed to the KaZaa network.

The judgment reasserts that copyright is really not about the right to make copies but rather about the right to distribute copies of protected works for use by others. Implicit in that position is that individuals or institutions making copies for purposes other than distribution are not subject to copyright law. In other words, if you're using copies for your own licensed purpose, you're not a distributor: distribution is when you willingly make a work available for distribution and it's actually distributed. In the instance of the Howells, the judge perceived that through whatever happenstance an index saying that copies were available for distribution was not the same as saying that any specific person was actually distributing copies.

Though there is already a growing body of legal decisions that seem to be weighing against RIAA efforts to discourage individual consumers from copying content, the Howell decision is notable in that the judge went to particular pains to delve into the technological "hows" of file sharing as well as into legal precedents. In doing so, Judge Wake has challenged publishers pursuing such suits to recognize that the more that they go into these suits the more that they create a wide portfolio of rulings that begin to flesh out the full reality of electronic content use - a portfolio that over time has weakened rather than strengthened their claims to inhibit content copying. Put simply, the more that these suits continued, the more circumscribed their claims become and the more that their presumption of complete power over copying will weaken.

Already many in the music industry have recognized that trying to inhibit copying per se is counterproductive, as it weakens their ability to build brand value with consumers swapping from one platform to another at will to consume content. If your customer gets a new mobile phone, do you really want to hassle digital rights management issues when they try to transfer their music files to the new phone or do you want them to still be able to love the artists that you have in your stable? Increasingly being able to sustain passion for a brand is winning out over the absolute right to prevent copying. Distribution enables a relationship with a content brand: once that relationship is established, the relationship becomes more marketable than the content itself over time.

Music publishers are beginning to get a far stronger sense of building marketable relationships with audiences as the key to their future profits. Digital watermarking techniques are one key element of moving away from fortress-like content packaging and towards being able to understand the value of the relationships being formed with content as it moves from one context to another. If a CD is copied but nobody cares about it, that's probably a bigger problem in the long run than someone copying a CD and discovering that people care about it very much - and will give you opportunities for revenue that spring from that distribution. Managing copyright via asserting distribution rights is still a very key mechanism for enabling revenues, but the future is in recognizing that you're far better off in the long run taking advantage of free distribution to get content into the hands of people who are likely to be your most valuable customers. Once it's there, have your content packaging ready and able to start the value conversation.

Labels: copyright, distribution, legal, RIAA, suit

The Associated Press' position in the news world is in some ways stronger than ever, building on both traditional newspaper portals and the growth of online-only news venues such as Yahoo, Google and social news outlets. But it's also a challenge for AP and other wire services to define a path towards long-term growth as the variety of outlets that can generate and distribute news on the Web outside of their purview accelerates. An earlier lawsuit against Google for their use of news from AP on member sites yielded a settlement in AP's favor, so it's no surprise that AP is trying again with a new lawsuit against Moreover, Verisign's content mining service for media and enterprise clients.

In the AP statement on the suit AP notes that AP discovered the extent of Moreover's practices while negotiating with it to provide content management services to the AP's members. Oops. The main bone of content seems to be that, like Google, Moreover is fairly efficient at harvesting news from AP from member sites for its clients, claiming that headlines could be appearing in Moreover within two minutes of their hitting a news Web site. This hits a little too close to AP clients who want to be the source for breaking news headlines. Adding to AP's perceived pain is Moreover's revenues gained from ad-supported and subscription services, including what AP claims is Moreover's use of story texts and photos.

Cleverly the suit claims that Moreover's uses of headlines violate fair use laws by merely copying them instead of transforming them into a unique form and format. Given that fair use is used primarily for publications to use limited direct quotation of sources in news articles and other original works this seems like a stretch at best in relation to fair use law. By this definition any page of search results would be suspect, even though one could argue that each page of search results represents an original work of authorship through its organization of content into a unique compilation as proscribed under U.S. Copyright law. Search engine companies have been reluctant to test this concept in courts, however, as globally the interpretation could vary significantly. So this type of threat has been an effective tool for brining technology companies to the bargaining table for AP.

Although AP's suit covers no apparent new legal ground it's use as a negotiating tool targeting a content harvesting company is an important new wrinkle. Although Web mining technology is in many ways little different than search engine crawlers its use to build applications beyond mere search results means that more value-add applications based on these technologies are becoming targets for copyright enforcement. It opens up many questions for both Web miners and providers of mashups and embedded content services. Services such as Sphere, which serve up embedded link references through its own crawling services, have become very popular with publishers trying to provide value-add content links to their sites, and these could become potential targets for AP-like lawsuits as well. Notably AP is targeting relatively mature businesses but with its use of the Attributor content tracking technology any service could become a target potentially.

While AP may have some legitimate foundations to their concerns at the end of the day this is yet another company with distribution at the heart of their content business model struggling to understand how to position itself in a marketplace where distribution is in essence a free service. Like music publishing companies trying to position the value of their services for potential clients AP's aggressiveness in monitoring and pursuing potential copyright infringement provides them with a legal enforcement angle to their content licensing services that can help to justify premium prices for their services. But also like music publishers may come a point when the talent recognizes that they're pretty good at making money without distribution-oriented middle men.

But AP is far smarter than music publishers in pursuing licensing deals through their surveillance efforts with companies that are likely to be able to pay in proportion to the commercial value of their services. Notably Moreover was an early entrant into content harvesting so its relatively mature base of enterprise and media clients gives AP a reasonable target to pursue that's more likely to settle on commercial terms than to go to the mattresses to defend matters on principle alone. In this sense AP is approaching situations like the Moreover suit as a rather aggressive business development effort - one that's not likely to endear AP content to the burgeoning embedding industry but one that may have some commercial effect for now but which may erode interest in AP as a business partner over time. In the meantime the stage is still wide open for virtual aggregation services that manage copyright issues effectively for both enterprise and media services to keep suits like AP's from becoming licensing nightmares.

Labels: aggregation, AP, copyright, fair use, harvesting, legal, mining, Moreover, suit

The announced USD 630 million deal for Incisive Media to acquire ALM is unquestionably the strongest acquisition move in the B2B media space in a year of largely aimless portfolio shuffling. Incisive is biting off a huge piece in the process of doing so - they have about USD 280 million in annual revenues - but this is far from your typical "let's balance the portfolio and combine content management systems" deal. In acquiring ALM Incisive walks away with one of the most effectively integrated range of legal publications for an industry vertical that has strong print revenues but also a remarkably strong and progressive online presence.

In addition to ALM's wide range of traditional ad-supported editorial content they have been very active in integrating leading weblogs into their ad network and have gone way deep into their own vertical user-generated content via VerdictSearch, a portal that allows legal professionals to input details on cases and settlements into a database that can be searched or mined by ALM's editorial staff for hot legal stories. Toss on a strong relationship with Thomson West for enterprise integration and a strong events presence and you get a profile that most business information companies would have to work very hard to top.

And that's before you get to the management team. Bill Pollak has assembled a top-notch staff at ALM to help it transition very profitably into the electronic age, holding out some promise that in the merger of these two companies it will be more than your typical "puff and slough" weed-out of mergee managers. Hopefully Incisive keeps much of ALM's team in place to help them assemble more effectively integrated marketing in vertical segments. Incisive's portfolio includes a wide range of titles largely aimed at financial markets that do very well online in many instances, but they have not leveraged new models of engagement for their audiences as effectively as ALM in many instances while some strong Incisive titles seem to be shoehorned in together rather oddly (do ClickZ and Search Engine Watch really belong in the same group as Inside Market Data?).

Conquering both legal and financial markets in one portfolio is a very shrewd move, with the deal flow in these two segments oftentimes creating very complementary editorial and data flows. While the size of this deal may tie up Incisive's cash for a while it would be nice to think about how some further database acquisitions or alliances might help to create some very interesting synergies for dealmaking business information. But in the meantime there's also the complementary presence of Incisive's UK-oriented legal publications and other globally-oriented publications that will be strengthened by ALM's largely US-oriented marketing.

While doubtless there will be some gnashing of the gears as new interests are merged and some cleaning out of questionable rabbit warrens this is a powerful move that draws into focus the increasingly merging worlds of legal and financial interests that will benefit from the combined coverage offered in these two teams. Hopefully this merger benefits the ALM team as much as it appears that it will benefit Incisive. Time will tell.

Labels: ALM, Business Information, Deals Partnerships and Sales, incisive, legal

paidContent.org has a good summary of the meat of Viacom's new lawsuit against Google claiming that the thousands of video clips being posted to Google's YouTube service are violating the 1998 Digital Millenium Copyright Act. A good analysis by CNET of exactly what in the DMCA is germane in this suit points out that the thin ice that Google is treading upon is the alleged encouraging of mass infringement of copyright - in spite of very specific statements in its terms and conditions to the contrary. Financial analyst Henry Blodget notes in his blog that most of this is about heavy-handed deal-making and the ultimate failure of Google to come to terms with Viacom in recent discussions over content use and licensing.

While the legal precedents are not strongly in favor of Viacom's view of this suit there are some important twists to consider. Though there is no user-driven revenue model for Google via YouTube as of yet it could be argued that Google is engaging in trade practices similar to what supermarkets have used oftentimes to penetrate new markets. In years past a chain wanting to dominate a given market would lower to cost of its goods to the point of losing money in that market's stores to force competitors to lose business - and eventually fold. Viacom's claim is in essence that Google set up a store and stocked stolen goods similar to their competitors and made them available at deep discounts - say, in this instance, for free. If this can be argued successfully in the courtroom Viacom has a leg to stand on.

But this argument falls apart from a few angles. First, it's a little ironic that Viacom is claiming in a USD 1 billion suit that Google is using DMCA-sanctioned "takedown" of copyrighted content is a heavy-handed tool to buy them time in negotiating licensing deals. Other media companies have managed to come to commercial terms with Google for the use of copyrighted content on YouTube: what makes Google more "evil" in its relationships with Viacom? These precedent deals for YouTube usage can be used effectively in a suit as examples that Google does indeed want to license copyrighted content lawfully.

Equally important is the question of whether Viacom has demonstrated that it has in fact tried to protect the value of its copyrighted content from duplication. If video clips are as easily "borrowed" by audiences as apples from an unattended fruit stand then the "stolen markets" issue is not easily argued - willful neglect could be argued fairly easily by the Google side. Had these clips been behind a firewall or in a DRM wrapper that Google had cracked directly, the DMCA angle on this suit would hold much more water. As it is, Viacom has no effective technology that prevents audiences from "borrowing" its online content.

The real cloud hanging over this suit, though, is the pending legislation in the U.S. Congress to revise the DMCA to allow for more generous terms of use for copyrighted content by individuals. Viacom could in theory win its courtroom battle but find itself losing the war as new laws are passed making the laws far more in line with current practice via YouTube and other social media portals. It is this pending legislation as much as any real licensing issues that are probably behind Viacom's move to sue Google. After all, if you're going to have Congressional hearings on fair use as a part of that legislation, Viacom testifying to Congress as a major suit-bringer has a more serious heft to it.

All of this boils down to one key factor: Viacom and many other media companies have given little or no thought as to how to make content automatically monetizable through social media services such as YouTube. Yes, Viacom, your copyright has been abused by some posters on YouTube, and yes, you shouldn't have to ask Google after the fact for documentation showing where content was in fact being abused, but why are companies like Viacom failing to implement tools and policies to help monetize their content more effectively? Consider Viacom's suit perhaps the last loud "bang" of anti-Google legal maneuvers - due in large part to Google's having anticipated the needs of video producers far more effectively than any other major content outlet. The case could break the other way but for today I'd bet on Google continuing its push towards video posting as it awaits reasonable action being taken by courts to validate its thinking about what makes a successful content play in today's New Aggregation.

Labels: DMCA, Google, legal, Trends, Viacom