InfoTech & Public Policy

Yesterday Apple Computer announced that it will continue to charge 99 cents per song on its popular iTunes music-downloading service. Recently there has been talk that Apple, facing immense pressure from record companies, might move from a uniform pricing model to a variable one (i.e., charge different prices for different tracks). Leading the push for this change have been the music industry’s big four –- Universal, Warner Music, EMI, and Sony BMG –- which are doing virtually everything in their power to offset declining CD sales with new revenues from internet downloads. In particular, these companies want to be able to charge more for new songs from top-selling artists. However, Apple’s CEO Steve Jobs argues that these companies are “getting greedy.” Furthermore, Jobs claims that higher prices will cause consumers to “go back to piracy.” The argument is that prices must be low enough to deter consumers from downloading songs illegally. Given that the iTunes Music Store commands a staggering market share of about 80 percent and thus has a significant amount of leverage over the music industry, it is no surprise that Apple came out of negotiations on top.

But while Apple’s announcement of no change in pricing is being portrayed in the press as a defeat for the music industry, it is not clear that this is so. In fact, the music industry may be benefiting more than it realizes. Jobs has a very good point: higher prices will incentivize consumers to download songs illegally, as opposed to doing so legally using services like iTunes. Therefore, it is possible that record companies might actually lose revenue by raising the price of a song, since many consumers might decide to stop paying for music when they can download it for free (albeit illegally). Plus, differential pricing schemes whereby hot songs cost more money might be considered unfair by consumers, and thus might cause them to download songs illegally in spite of the music industry.

This posting is a response to that of Gregory Redman entitled “Placeshifting” in which Redman discusses Sling Media’s Slingbox. This new technology allows users to watch their home television from anywhere as long as they have a connection to the Internet. This capability, when combined with a TiVo, is especially useful because it allows Slingbox users to watch not only wherever they want, but also whatever they want. However, buying a Slingbox is no cheap proposition. The device, which can be found in stores like Best Buy and CompUSA, costs about $250 — which is approximately the price of a brand new TiVo box. (Unlike TiVo, however, Slingbox has no subsequent subscription fee.)

In light of Redman’s posting, I would like to raise awareness about another technology which is very similar to Slingbox, yet absolutely free (i.e., costs consumers nothing). This is Orb Networks’ DVR Everywhere. (For more information about DVR Everywhere, see this article.) The key difference between this product and that developed by Sling Media, aside from cost, is that DVR Everywhere is a piece of software which runs on computers with Windows XP, whereas Slingbox is a piece of hardware which does not require a computer to run. While unfortunately I cannot offer any personal anecdotes as to whether one technology works better than the other since I have not used either of them, from what I have read it appears as though the free technology (DVR Everywhere) works just as well as the one that costs $250 (Slingbox).

The other major advantage of DVR Everywhere is that it does not require special software to be installed on the user’s computer. Rather, all the user needs in order to play and program television recordings is a Web browser and a streaming media player such as RealPlayer — both of which are standard applications on almost any computer. Slingbox, on the other hand, requires the installation of a special application called SlingPlayer which is only compatible with Windows at this point.

The problem with technologies like DVR Everywhere and SlingBox is that they challenge the rights of many copyright holders by violating the notion of proximity control, which according to the article discussed in class “restricts the distribution of content to specific regions and times.” As placeshifting devices continue to gain popularity, we must figure out how to protect the rights of copyright holders while at the same time allowing the consumer to reap the benefits of such a useful technology.

A few weeks ago in class we discussed “virtual worlds.” I would now like to discuss an issue that is closely related to the concept of virtual worlds. This issue is “virtual sex” (which can take place in virtual worlds). While browsing through the news, I came across an article about a new type of online game: sex games. Unlike other popular online games such as Second Life and World of Warcraft, these games are designed for one and only one purpose: to allow players to “meet, flirt and have sex.” In other words, these games facilitate the act of virtual sex — not to be confused with real sex. Games like Second Life and World of Warcraft, on the other hand, allow players to do almost anything they want; that is, players are not limited to sexual encounters, as they are in sex games like Naughty America (mentioned in the article). Nonetheless, about a third of the activity that takes place in Second Life falls into the category of “adult encounters,” most of which are sexual in nature. Therefore, this new breed of online games (e.g., Naughty America) is similar to those which are already very popular (e.g., Second Life) in that one can engage in virtual sex in both, but the key difference is that sex games are intended solely for this purpose. Put differently, there is nothing to do in sex games other than have virtual sex.

There are many dangers posed by online sex games. Perhaps the most serious is the risk that sexual predators will use these games to find their next victims (just like they use chat rooms). Even if this does not happen, what if sexual predators start having virtual sex with minors in these games? Will this be considered a crime in real life? This question raises another issue: How will the games prevent those who are underage from playing?

There is, however, at least one advantage to sex games. These games allow those who are involved in a long-distance relationship to have some way, albeit virtual, of engaging in sexual relations with one another. Consider virtual sex analogous to phone sex, except that virtual sex is visual while phone sex is audio.

I would like to discuss an issue which relates to privacy protection and identity theft. While reading the Drudge Report, I stumbled upon an article about Broward County and its online database of public records. Apparently, by visiting the County’s public website at www.broward.org, one can search public records dating all the way back to 1978. What’s discouraging about this is that public records often contain very sensitive information such as Social Security numbers, dates of birth, and bank account details. Therefore, those who are interested in stealing identities and committing other acts of fraud can do so effortlessly (i.e., without even phishing or hacking), since the information they are seeking is posted on a website and hence publicly available. This information could also easily be used by terrorists interested in causing harm to the United States. Thus there is legitimate reason for concern.

Perhaps more discouraging is the fact that Broward County is doing nothing about this until January 2007 (at which point “redaction software” will be installed in order to clear the public records of all information which is potentially sensitive). In the meantime, current as well as past residents of Broward County will be at risk of identity theft as well as other types of fraud. While some residents like Bruce Hogman (mentioned in the article) have filed complaints not only with the County Records Division itself but also with federal organizations like the FBI, Broward County officials maintain that they are merely complying with laws which “require counties to post public documents on the Internet.”

If such laws do in fact exist in certain counties, they must immediately be amended to include a provision which requires all sensitive information to be adequately protected. Clearly, posting this kind of information on a public website poses a serious threat to certain individuals. One way to solve this issue would be to “white out” all potentially sensitive information, perhaps via software similar to that which Broward is planning on using, so that it is impossible for thieves to obtain this information. If removing all sensitive information is not feasible, then perhaps we should consider not posting public records on the Internet under any circumstances at all.

Generally speaking, we as a society need to be extremely careful when posting sensitive information on the Internet. If this information falls into the wrong hands, then a lot of damage can occur. Therefore, it might be wise to consider adopting legislation at the federal level which prohibits counties from doing what Broward did.

First, as a member of Avi’s group, I would like to add to his post entitled “Encryption as a Solution?”. While this post is very thorough, it does not address the question of whether or not requiring encryption would “place an undue burden on small carriers.” This is an issue on which the FCC specifically seeks comment.

We think that there might be a disproportionate burden on small carriers if in order to meet the new standard of security, these carriers must upgrade their technology, at least to a greater extent than large carriers. Large carriers, on the other hand, are likely to already have the best technology available, as well as experts on hand (e.g., chief technology officers) who know how to operate and install this technology. Therefore, requiring some minimum level of encryption, as we recommend, might force small carriers to spend money on new technology, whereas large carriers might not need to make such expenditures because they already have sufficient technological capabilities.

If placing an undue burden on small carriers is a big concern, then we recommend the following. Instead of enacting legislation which applies equally to all carriers, it might be wise to enact legislation which affects carriers differently depending on their size. Or alternatively, we could pass legislation which affects only large carriers. Given that these carriers presumably represent a substantial share of the telecommunications market, such a policy would have a significant impact (i.e., protect a large fraction of the consumer population) without imposing additional costs on small carriers.

Totally unrelated, I would like to make one final comment about MySpace. I have noticed that there have been a considerable number of posts recently about this website. There have also been a lot of stories about it in the news. Most recently, MySpace decided to remove about 200,000 “objectionable” profiles from its site.

Perhaps this move comes in response to all the media attention that MySpace has been getting lately. In fact, I question whether this is anything other than a PR move, especially considering that MySpace is now owned by News Corp, a company which is very conscious of its image. The fact of the matter is that those who want to post “objectionable” content on the Web, such as hate speech or risque material, will find ways to do so, even if they are restricted from using MySpace. Therefore, on the one hand, MySpace is essentially doing nothing to solve the problem; rather, MySpace is simply diverting users to other websites. On the other hand, this is really the only thing that MySpace can do to solve the problem. If we really feel as a society that certain content is too explicit for the Web, then maybe we should limit what can and cannot be posted on websites. I would argue, for example, that hate speech serves no purpose for society, and is not productive in any way. Of course, limiting content on the Web would raise serious concerns about free speech.

While reading the Drudge Report last night — an activity which is as much a part of my daily routine as showering in the morning (and yes, I shower every morning) — I noticed that the College Board has yet again announced that certain SAT tests taken back in October were incorrectly scored. In particular, another 375 students were found to have incorrectly low scores, bringing the total number of students in this category to 4,411. Having experienced myself the pressure and anxiety involved in the college admissions process, I can certainly sympathize with these students. However, I cannot even imagine how cheated I would feel if I did not get into college because of a stupid computer error which caused my test to be graded incorrectly.

While it would be naive of me to claim that technology does not make mistakes, this is a domain in which mistakes simply cannot be made. Minimizing the number of mistakes is not good enough. People’s lives and futures are at stake. Where one attends college matters, and something as seemingly unimportant as a few points on the SAT can make all the difference between getting accepted and getting rejected from a particular school. Therefore, it is imperative that we figure out how to prevent these mistakes from happening.

My solution is twofold. First, I propose that college admissions committees place less emphasis on the SAT. This way, a few extra points on the SAT would not sway an admissions committee one way or the other. Furthermore, students would not be discouraged from taking tests other than the SAT, such as the ACT. Sometimes students do not even bother with the ACT because they assume that it will not get as much weight as the SAT in the admissions committee’s decision process. This assumption may in fact be valid. But it would not be if prestigious universities were to come out of the woodwork and announce to the public their decreased emphasis on the SAT. Rather than supporting only one standardized test, colleges should encourage students to take more than one kind of test, thereby allowing students to diversify themselves against any grading mistakes which might occur.

Second, I propose that we increase the level of oversight devoted to organizations responsible for grading standardized tests like the SAT. For example, these organizations could be required by law to be frequently audited in order to insure that they do not make mistakes. Considering that the reputation of these organizations is at stake, one would think that they have enough common sense to police themselves. However, the market for grading standardized tests is not really a competitive one, so the incentive to maintain a good reputation might not be strong enough. Thus, a law might be necessary.

Tonight in class we discussed, among other things, how the practice of file-sharing has evolved over the past few years on the Princeton campus. One student’s most vivid memory of the way things used to be on campus with regard to file-sharing is the time he was able to download (using P2P software) and subsequently play a video game online with many others who had also downloaded the game, even though the game had not even been released yet. Needless to say, things have changed a lot since then — perhaps not as much with respect to software, but certainly with respect to music. Ever since the RIAA started cracking down on individuals who violate copyright law by downloading music illegally, students at Princeton have become much more cautious about file-sharing. This is not to say that illegal file-sharing has stopped altogether. But it has definitely declined dramatically, especially in the realm of music. Contributing to this decline, no doubt, has been the growth in popularity of services like iTunes which allow users to download music legally simply by paying a small fee per song (99 cents in the case of iTunes).

Yet it does not make sense to me that many Princeton students, including all my roommates, have stopped illegally downloading music altogether. After all, doing so without getting caught is relatively easy. A simple Google search of the phrase “evading the RIAA” yields over ten thousand hits. The first of these is a site which describes how to protect oneself against the RIAA by using a proxy server. Technical matters aside, the point is that there are many different ways to reduce the (already small) likelihood and possibly even eliminate the possibility of getting caught downloading music illegally. Furthermore, students as bright as those at Princeton, if anyone, should be more than capable of understanding these methods and should therefore be able to implement them effectively. Why, then, is it not nearly as common as it used to be for Princeton students to download music illegally? Perhaps because they are extremely averse to the penalties they could potentially face. Or perhaps because they are not as bright (i.e., tech-savvy) as I give them credit for.

Finally, I would like to ask a question regarding the recent $612 million settlement between RIM and NTP. Please respond if you have any ideas or answers. Tonight we were discussing the “utilitarian approach” to copyright law that is used in the United States, the purpose of which is to promote innovation. To me, the RIM/NTP story demonstrates that these laws often fail to achieve their purpose. Apparently, NTP is a company that simply holds patents. That is, they patent certain inventions and then wait for other companies to implement them, at which point they sue these companies for patent violation — a pretty dicey business model if you ask me. Shouldn’t patent law be geared toward actually implementing inventions as opposed to just conceiving of them? If you ask me, inventors should face stronger incentives to produce rather than simply to generate ideas.