InfoTech & Public Policy

Avi’s recent post “The New Ads” asserts the death of the 30 second ad and points to viral advertising as the new frontier in pushing products. While his points are well taken, focusing exclusively on the new forms that commercials will take as television moves online misses the larger picture: content, not just advertisements, is sure to evolve.

Between Tivo, Slingbox, piracy, ad-blockers, desensitization and competition from an ever-increasing array of media, it certainly looks like television producers are in for a rough period. Only very recently, with the introduction of itunes, the online broadcast of sports events and ABC’s next-day streaming of popular shows, have they started to take advantage the new distribution channels the internet offers. Even more nascent is the use of the internet to supplement media content.

ABC has been a pioneer in this area, particularly with Lost, its breakout hit, now in its second season. For the uninitiated, Lost follows a couple dozen survivors from the crash of Oceanic Airlines Flight 815, who are trapped on a mysterious island. When the show first launched, ABC created a web site for Oceanic Airlines complete with the ability to look up flights and make reservations to create buzz about the show. More recently, in anticipation of the summer break between seasons, ABC has launched “The Lost Experience,” a game set to run in parallel to the show that includes web sites, commercials airing during the show, billboards, phone calls and other interactive multimedia.  The show has also made a serious effort to have its cast and writers engage the fan-base by taking part in online forums and actively responding to feedback and theories about the show.

In a way, The Lost Experience can be seen as the direct descendent of Majestic, a PC game that EA introduced and then swiftly abandoned about 5 years ago. Majestic was a fully immersive mystery game; not only would you play around on the computer to try to figure things out, but the game would contact you by email, phone, fax and IM and would tailor its content to you specifically. For instance, the game might send you a handwritten, threatening letter that mentions your family by name. While Majestic proved to be staggeringly unpopular, largely a function of being too involved, it and its derivates represent the sort of total immersion that will likely become increasingly common as the internet enables new content, not just new ads.

As we’ve discussed in class, a pair of consortia, led by Sony and Toshiba with Blu-ray and HD-DVD respectively, are competing to position their next generation technology as the market leader in portable data storage. HD-DVD is going to hit the market first, be cheaper and easier to produce, and posts entertainment heavyweights like Paramount, Warner Bros and Universal Studios on its side. Blu-ray, on the other hand, will have a greater storage capacity (50gbs compared to 30), an army of hardware manufacturers (Dell, HP, Hitachi, LG, Mitsubishi, Panasonic, Philips, Samsung, Sharp, Sony, Thomson &c.) as well as its own team of content providers (Sony Pictures, Metro-Goldyn-Mayer, Disney, EA and Vivendi Universal) and the advantage of being tied into the Playstation 3. Yet, lost in the wild speculation over which system will prove to be the alpha male and which will be the Beta, is the question: is this manner of competition good for consumers?

Competition should only be encouraged insofar as it produces positive outcomes for consumers. The Beta/VHS war illustrates that the best product may not necessarily win out and that consumers will be shortchanged throughout the fight because they may end up with obsolete equipment. But the most galling aspect of this whole competition is the content providers who are lining up on one side or the other, limiting competitors’ access to their media in order to bolster the prospects of their chosen technology.

While Sony and Toshiba should be free to compete on quality, price, time to market, customer support, backwards compatibility and any number of things related to the data storage technology, competing on the basis of content should be prevented by antitrust regulators. Lining up exclusive rights to studio content in return for a cut of the royalties prevents consumers from enjoying content they otherwise would without purchasing both devices. And the particular content that is being restricted has no inherent compatibility with Blu-ray or HD-DVD; it is as if Sony managed to line up VISA to ensure that customers hoping to buy their HD-DVDs could only pay with Mastercard.

While regulators would not typically permit a monopolist to tie his product in exclusively with another in hopes of capturing some royalties from that secondary market (hold your Microsoft jokes), studios are typically thought to operate in competitive markets without monopoly power. Regulators need to realize that media is not so perfectly substitutable and is in some ways an addictive good (which has increasing marginal returns with consumption, as opposed to diminishing ones). As such, there is an important role for them to play in making sure studios are neutral in their provision of content, a role they seem to be shirking from in the Blu-ray / HD-DVD battle.

Gregory Redman’s recent post on academic dishonesty and the role of technology is the start of a conversation that I feel Princeton needs to have. Just yesterday, the Crimson broke the story of a sophomore who had published a novel while in high school, signed a $500,000 publishing contract and been pitched a movie based on her book by Dreamworks, only to be exposed as a literary fraud who, quite clearly, plagiarized another author’s work.

I have no idea how many Princeton students cheat, but I imagine a great number do and that a significant fraction of the student body could be brought before the Honor Committee if a concerted effort was made to root out academic dishonesty. While this scenario would give me considerable satisfaction, so long as none of my friends were implicated, the thought of the university unilaterally engaging in this sort of honesty review raises many of the same privacy concerns that have come up in class and on this blog.

Redman suggests that the reason the University opted not to participate in Turnitin was the requirement that students surrender control over their own academic work. This is an understandable position for a student in our class, where we have spent a fair amount of time wrangling over the finer points of copy-write law, to make; I doubt many students would truly care that their ideas might be accessible online. Indeed, writing a thesis that merits publication in even the most marginal journal would be a tremendous success for any of my peers in engineering and the hard sciences. Outside of junior and senior independent work, I can’t imagine any student would produce scholarship that has enough intellectual value that the author might care to protect it. In any event, a system could easily be designed that would attach anonymous IDs to work submitted on Turnitin or, with fairly minimal effort, the University could create a private, internal paper database to review student work.

I think the really reason is probably that the University considers ideals of academic honesty to be less important than preserving its reputation and the academic careers of those students who may cheat, but do not do so egregiously.  But there’s another important reason that has to do with privacy and the core bargain of the honor code. In the same sense that I don’t want wiretaps employed without probable cause (even if it will catch more terrorists) or random searches of my locker (even if it will find more drugs), random (or certain) inspection of academic work is troubling.

After all, the Honor Code obligates us to tell on our fellow students, but it also removes proctors from the exam room and establishes an environment of trust for and respect of students. Employing something like Turnitin would transform us from students and scholars to suspects. Indeed, it is unclear to me that the University could impose Turnitin on the Honor Code framework – such a movement would have to come from the students and would have to reflect a concession that the Honor Code is insufficient.

In this way, I think the debate over supplementing the Honor Code reflects a broader premise of privacy: that those who give up privacy be consulted and notified.

Yesterday, Avi wrote a column in the Prince arguing that Princeton’s expansion of wireless internet into classrooms is probably a bad thing. I hate to say it, but on the whole, I agree with him. When I bring a computer with wireless into class, there’s a constant temptation to check my email or get my news fix. At the same time, having a computer with an internet connection is occasionally (in a few of my engineering classes or on this class) instructive and valuable. Moreover, when classrooms are empty, I often enjoy working in them and taking advantage of wireless internet. Ideally, professors would be able to flip a switch to turn wireless internet on or off, letting students use the technology when it suits them and turning it off when it will just be a distraction.

I wonder about extending Avi’s remarks to the large-scale wireless networks encompassing whole cities that are starting to be built. The thought of being able to check my email on the subway is a tempting one and I can only imagine the proliferation of technologies that will take advantage of widespread wireless internet. At the same time, I’m not thrilled about the possibility of drivers checking their email as they cruise down the highway or hearing “you’ve got mail” in addition to the incessant cell phone ringing at the movies. With the ongoing expansion of internet and interconnectivity into every facet of life, when is it appropriate to shut it all out and who should have that power?

As far as I know, jamming frequency, be it the sort used for cell phones, internet, radio or what-have-you, is generally frowned upon. Yet the idea of being able create internet and cellular dead zones in theaters, restaurants or classrooms sounds great. I guess what I’d like to see – and this is how this post ties into the topic of the week – is some sort of non-neutral solution. I think property-owners should be able, to some degree, to control the information that flows into their property. At the same time, I think users should be able to communicate sufficiently important information as easily as possible.

The solution is to create a network with two tiers. Property owners should be able to filter out phone calls and email and all the rest that is identified as frivolous, but business people, physicians or firefighters (for instance) could pay extra to receive urgent or important messages in all locations. I think, when we talk about and think about how to evaluate network neutrality, that we don’t limit our analysis to ISPs and web content providers, but rather think more broadly about what opportunities exist to discriminate across networks.

This past week’s discussion about virtual worlds raised some very interesting issues that are related to what we’ve discussed about internet governance, but are also somewhat distinct. While we’ve talked about the value and the widespread desire to retain the internet as a space free of regulation and coercion – a libertarian Xanadu – the nature of virtual worlds makes the case for leaving them unregulated especially compelling.

The internet, arguably, loses its special character when it is used to replicate what can be done offline. Few would argue that purchasing something online instead of in a store for the sole purpose of avoiding the sales tax or evading the law (as in gambling, drugs, Nazi memorabilia, &c.) deserves some sort of protected status. At the same time, virtually everyone acknowledges that the Chinese government’s requirement that Google censor politically volatile information from its searches is, at a minimum, unfortunate.

At its core, what makes the internet special is its ability to transcend the restrictions that mark everyday life, be they restrictions of geography, identity or information. Nothing more clearly embodies these characteristics than virtual worlds like Second Life.

Second life allows people to interact with each other with a minimum of rules and restrictions. People can be, do and say whatever they like. A cursory tour of Second Life reveals hundreds of casinos, strip clubs and war games, but also opportunities to meet, chat, debate, build and explore. The currency people use is wholly managed by Linden Labs, which in turn is responsible to its customer-citizens. It is clear that much of what goes on in SL would be illegal if it took place inside a brick and mortar building in the United States, but regulating SL seems, at least to me, to be quite different from regulating partypoker.com. SL is less a business transaction than it is a transcendental experience.

It is also unclear that the US government even has the authority to regulate business transactions in a virtual world. While Congress does have the authority to regulate interstate commerce, and that this power has been read extremely broadly since WW2, the courts have taken tentative steps towards making this power less of a carte blanche. Who is to say that transactions in Linden dollars – other than the purchase of Linden dollars with US dollars – constitute commerce? When the currency and the transactions are entirely confined to the online world, shouldn’t they be governed by that world? I don’t think the location of the servers is significant, in part because server location is arbitrary and completely unrelated to the operation of the world – servers in Silicon Valley could just as easily be in Canada or the UK or on a boat in international waters – in a way that the physical location of offline transactions is not. Modeling each virtual world as another country, with its own laws (EULA), taxation (fees), government (operating company) and citizens (customers), which citizens enter and leave when they sign in or sign off, provides a much more satisfying – and in some ways more sensible way of thinking about and interacting with these worlds.

While much of the discussion about the legality of the various technologies that are available to help people to consume un-purchased media has focused on the possible “legitimate” uses for which they may be employed, I think this overlooks one of the key differences between the time shifting that the Supreme Court authorized in the Betamax case and what file-sharing technologies or the techniques described by Jeff Dwoskin do: the impact of the use on the market.

The 1976 Copyright Act identifies four characteristics that determine whether an action falls under fair use:*

1)      The purpose of the use (commercial, educational, political, &c.)

2)      The nature of the work

3)      The fraction of the work copied

4)      The impact of the copying on the market for or value of the copyrighted work

Of these factors, the last is considered the most important consideration in determining whether a use is fair.

While someone downloading a song instead of purchasing it clearly impacts the bottom line of the record industry, on first glance, some other uses don’t seem to. After all, as some of my downloading peers say, if I didn’t plan to purchase the song anyway, downloading it is victimless.

This being the devil’s logic notwithstanding, such reasoning also fails to take into account the difference in value between a downloaded song and a song listened to on the radio. In the latter case, a station’s advertising rates and market share is reflective of the popularity of its content. In the former, the downloader does not contribute to a broadcaster’s ratings and so does cost them something. Moreover, while the court has recognized a right to time-shifting, it has not come out clearly in favor of the right to build libraries to watch at one’s leisure.

In my mind, taping a show and then watching it the next day is completely fair. Yet taping a show and then watching it a number of times seems to undercut the rental or home video market. Similarly, a record label may want its songs (even pay for its songs) to play on the radio in the expectation that a fond consumer will pay to hear the song whenever he or she likes. So while a customer may legitimately record a song on the radio to listen to once, doing so to listen whenever and to whatever you like would be fundamentally illegitimate.

There is another reason to oppose downloading and TiVoing and the rest on a consumer-centric basis. The somewhat imperfect delivery systems of TV and radio broadcast are well-designed to meet the needs of both consumers and artists. The unpredictability of radio serves a valuable function, exposing consumers to a wide range of music they might otherwise not hear and giving a voice to artists who could never find an audience on their own. In this light, downloading also hurts consumers by narrowing the scope of their experience to whatever songs or artists they happen to search for.

I suppose the best example to illustrate this point is library books. When a copyright holder authorizes a library to stock his or her book, he or she expects certain limits on its circulation. While a library may dent sales slightly, it can also build interest in the author’s other works and, to some extend, the library serves clients who may not be able to afford new books. But rather than just serving the author, libraries do great things for readers. If a reader finds that their desired book, say the new Harry Potter, is being borrowed, the library can steer them toward other books they might like, expanding their horizons and building the popularity of other authors. The library, the radio, the television and even the movie theater – venues where the consumer does not have total control over what he can consume – provide a value to consumers that cannot be replaced with downloading as it is currently conceived.

Itunes (in its previous incarnation less the 5 person per day limit) recognized this. By not including a global search function in its client, Itunes made it difficult for us to find the exact music we wanted. At the same time, by forcing us to browse our peer’s music selections, in my case at least, it opened up a new world of community and exchange that I valued even more than the convenience of being able to choose from thousands of songs. Any copyright law – indeed, any technological innovation in media consumption – should be sensitive to both its impact on commercial markets and its impact on the sociology of media consumption before taking into account more exogenous considerations, like the availability of legally legitimate uses.

* Wikipedia

I’d like to try to build on our class discussion of the FCC’s regulation of obscenity and the privileged place of broadcasters in an attempt to shed some light both on what the government owes its citizens and on what the media owes the public.

Let me first say that the government’s rationale for regulating “obscene” or “indecent” material sent over the airwaves is patently absurd. The courts have consistently upheld the right of Americans to enjoy prurient material in the privacy of their homes. That is to say, the government may, regrettably, be able to regulate the content of a billboard but they cannot outlaw a subscription to Playboy. I can’t quite understand why “indecent” broadcast television fits in the former category but not the latter. Consumers only receive the content if they (1) purchase a television and (2) select the relevant channel. I can’t see why this is more in-your-face than written pornography. I mean, to receive that, consumers have to (1) install a mailbox and (2) select the relevant catalogue. And as for those who suggest that people should be able to enjoy television without worrying about accidentally stumbling onto a an indecent channel, I ask why we have to deny this clearly in demand product to millions of consumers because a moralistic few are unwilling to purchase some sort of blocking device. I can’t accept that someone who actively purchases a TV is equivalent to someone passively witnesses a profane billboard or a lewd act.

I think the public should also reconsider its subsidy of broadcasters. While back in the day, when spectrum was not in demand and broadcasters performed a legitimate public interest role, there was an excellent reason to provide them with free spectrum. However, today this grandfathered spectrum allocation costs billions of dollars and the media, in particular the broadcast media, have never been less actively representing the fourth estate. With the demise of the news anchor and his replacement by the hysterical, schizophrenic, 24-hour news cycle, I don’t think there is a shred of justification for subsidizing major networks to the degree they currently are. In my mind, the broadcast media has to maintain its focus on its public obligations in order to qualify for this governmental subsidy. Even then, I’m dubious about the FCC continually leasing spectrum to broadcasters on a short-term basis. I can’t imagine that a broadcasting industry that actively lobbies the government to keep its spectrum can really manage to independently monitor and report on that very government. In some ways, while forcing broadcasters to compete with cellular operators for frequency might cause some to leave the industry, a one-time buyout could free up valuable frequency and raise serious cash for an increasingly indebted government while at the same time removing an important leverage that the government has over the media. Seems like a win-win to me.