Belated notes: Wharton Colloquium on Media & Communications Law

Wharton Colloquium on Media and Communications Law (papers available at link; due to a hilarious series of barriers and unforced errors, I only attended the Saturday session)

Christopher Yoo, The Federal Takeover of the U.S. Telephone System During World War I

He wants to use the history of the WWI takeover to change our understanding of how telecom developed in the US—for example, time of day pricing came out of the period of government control. Bell System’s financial history: 1895—earnings went into freefall with competition. 1913-1918—not a huge recovery, despite reconsolidation; revenues take off with the gov’t takeover, and a bunch of mergers that the takeover allowed/encouraged because the gov’t believed in common ownership.

Economies of scale: true with mechanical switching, not switchboard operators, who don’t scale; mechanical switching only came into use in the 1920s, but the consolidation was before then. There were problems of switching, of trunk lines, and signaling: there was no way to tell when someone was done with a call other than the operator monitoring the line. Thus increased connections increased the burden nonlinearly. Traditional economies of scale justification for reconsolidation is probably false.

Network effects: there’s never been a proper study of the independent telephone industry. The independents were not like Bell, only smaller; didn’t use long distance tech, but attached adjacent exchanges, but tech may have been much better. In Muncie, AT&T can give you Chicago, but the independents could give you Fort Wayne, which was more important to most callers. Independents had much more density in Midwest; would have expected network effects to work in their favor. Didn’t want to interconnect with the Bell system. They were racing to own the market. Unclaimed customers existed—wanted to outbuild, not interconnect, to force a choice by the customer they were racing to claim.

Independents had integrated systems, and 50% market share in 1907. By 1913 it was 45%. Bell was not a monolith then (when gov’t began monopoly oversight). Some argued that the government didn’t enforce antitrust enough, but there was no real consolidation until WWI. Bell cut way back on acquisitions 1912-1918, so Yoo thinks gov’t signals worked to slow consolidation. Independents started to want Bell deals because they were at the end of greenfields, undeveloped markets and entering a period of expensive intensive competition to get revenue from existing customers. He thinks this is an untold part of the story affecting gov’t regulators.

Primary driver for reconsolidation was the federal gov’t: didn’t want duplication, instead postalization. Very different story.

Universal service: Some say this is a post hoc rationalization for consolidation. Yoo’s contrary conclusion: there is cross subsidy from urban to rural areas; uniform pricing can be discriminatory if costs vary. Rate averaging was a tradition in the postal system as a conscious policy; Ulysses Grant used it as a reason for gov’t ownership of telegraph systems. WWI gov’t policy: keep rates low (that didn’t happen) and extend service; made rates uniform as a cross-subsidy.

Lessons: why did they give it back? They couldn’t afford it. Needed to raise capital to upgrade the equipment. Gov’ts need to finance out of acquisitions, not risk capital. Didn’t have institutional apparatus to run it, so kept all the industry people in place. When does gov’t ownership work best? Gov’ts have trouble raising capital, so if there’s dynamic tech change that may not work well, just as people argue that incumbents don’t like to explore tech.

Marsden: this is a very temporary, short period of gov’t control: was there really any battle over returning to private ownership? Also, compare the Civil War control of the telegraph system as a useful benchmark.

Yoo: Other interesting stuff was happening in WWI Europe; French telephone system sucked so they had to build their own systems.

Susan Crawford: Gov’t ownership may be a straw man: Teddy Roosevelt’s position—what we need is supervision. TR says: I don’t mind big companies as long as they’re not acting like the government.

Yoo: AT&T sought the middle ground of regulation. Progressives disagreed vehemently about this—e.g., Bob LaFollette; by 1924 his platform squarely endorses gov’t ownership, where in the early 1900s he had been more regulatory. Progressives struggled with scientific management, wanting centralized control.

Crawford: there was a lot of unhappiness with the service being provided. Discuss how that factored in.

Yoo: primary complaint—rates. Some complaints about service, but really it was that the rates were too high. Comparing per capita development in Europe/US, hugely favored the US. The fight was about rates versus coverage.

Christoper Marsden, Internet Co-Regulation: Towards a Theory of Constitutionalism

His paper focuses on the European approach to coregulation; needs more on the US. His book is about European content regulation of the internet. Mandatory filtering and other troubling developments are on the horizon. Human rights principles from European law are being used by big telecom companies to strike down recent UK regulation, railroaded through just before an election, which provides for stringent and nonjudicial remedies against those accused of unlawful downloading. Judicial review is pending.

Wikileaks: attempts to take down Wikileaks are a classic case study of private censorship—we don’t know if they broke any laws; haven’t been charged; yet things are happening with Mastercard, Paypal, Amazon’s cloud service, denying them access. Claim is that this is purely private, not a result of government pressure, but commercial decisions. He says this offends natural justice.

European system: coregulation, which at least appears to have formal intervention by government which can be reviewed, though this is mostly untested in terms of judicial review. Mostly a no-go in the US because of antitrust. US government doesn’t use carrots to control private behavior; Europe uses carrots as well as sticks. Blocking lists proposed in the UK: he thinks this is a terrible idea because the lists are badly constructed; it’s an ineffective alternative to going after the sites themselves—we could chase them as we do with phishing sites; it violates freedom of expression. Other countries have much cruder blocking in place, and other countries don’t; possibility of 27 different systems of blocking.

Soft law: solutions without statutory authority, a lot more in Europe than in US. European Commission has legislative initiative, and strong soft powers/industry liaison. Powers of patronage. EC can also issue Recommendations advising industry, such as 1998 recommendation Rec[98]460 on protection of minors and human dignity: detailed code of conduct for ISPs, updated 2006; forerunner to Ecommerce Directive. European Parliament/Council is highly critical because these are unilateral, nondemocratic, unaccountable.

EC likes to give out carrots, more than sticks. Companies need gov’t approval to avoid regulation. They’re generally happy to cooperate, even if it’s formally self-regulation.

What is civil society’s role? More than just industry is concerned with internet regulation. Legitimacy requires participation: when the European Commission carries on about ICANN, it’s doing its job.

Smarter self-regulation: Europe allows far closer relations between government and business than US on things like web blocking. In the US, there’d be First Amendment and antitrust barriers to getting dominant ISPs together to agree on how to treat speech.

EC now requires all large social networking sites to report on how they’re contributing to privacy and fundamental human rights of their users. Not a legal requirement, but a practical one. FB: do they need an “abuse” button on every page of their site to allow people to report cyberbullying, as Bebo had? (Drowned the Irish police in reports; they ended up forwarding the complaints to the schools, because most complaints were about kids bullying other kids; which also has privacy implications.) FB said “get lost,” and won.

We are moving towards formally recognized co-regulation, with statutory authority to step in where it doesn’t work. EC doesn’t prioritize innovation, think the technology is mature; many European politicians just hate the internet.

My comments: Maybe the US is just more corrupt—we don’t give carrots for behavior, we just give money to our private sector. This is why my assumption is that the gov’t is rarely in the driver’s seat in these partnerships.

As a theoretical matter, does co-regulation have to come from the executive/legislative branches? In other words, could we consider Google as co-regulator because of its relation to the judicial system? The paper’s model seems to suggest that government approval/threat of sanctions comes under the heading of co-regulation, which could encompass judicial approval/threat, but Marsden also suggested that the threat of gov’t takeover is the primary sanction, which wouldn’t fit the judicial model. Google and eBay (and Facebook and Twitter) appear to be privatizing TM law as well as copyright, perhaps more so in the US than in Europe. Judicial deference in US and Europe seems to be emerging (possibly could compare judicial concept of good faith in an intermediary as it affects secondary liability to other forms of government deference to industry consensus/rules).

Marsden: his concept is based on legislative power. The soft law aspects are not based on legislation, but they come from a body that has the power to make legislation if it’s ignored.

The closer the issue comes to national security/terrorism, the more the power shifts to the state, and the more nervous the firms get about working with the gov’t, because in those instances the gov’t has no interest in cost-benefit analysis or market barriers or anything else of concern to the private sector.

Andrea Matwyshyn, (Techno)Essentializing Breach

Paper is about whether there’s something special about breaches of contract that involve technology. Courts have increasingly accepted arguments that essentialize the impact of networks and computers on the contract itself. She disagrees. Focusing on the role of the computer is focusing on a salient but ultimately irrelevant characteristic from the standpoint of contract.

Ad: “terrorism: if you suspect it report it,” with pictures of cameras, computers, phones, luggage, and vans. Penn Gillette’s response, using the same pictures: “average people doing nothing wrong, leave them alone.” Tech is everywhere; is it special? Congress passed CFAA based in part about a freakout over the movie WarGames. (Talk about a moral panic.) Now, Microsoft sponsors the HacKid Conference, for kids who like to hack—hacking is a term that is not just a threat.

Some courts have accepted that breach of contract constitutes invalidation of authorization for purposes of the CFAA, making the access unauthorized and thus violative of the CFAA, potentially criminally so.

Crawford: point is it’s inappropriate to leverage breach of contract into a criminal violation. But that relies a lot on contract, and yet there’s so much academic and other questioning of the legitimacy of mass market contracts—should they be binding? These aren’t real contracts in the traditional sense; should we be treating them with the sanctity of contract?

Matwyshyn: To the extent that the harm that arises isn’t contemplated by the contract, there may be a CFAA claim, but it shouldn’t be based on breach of contract.

Crawford: but privity as a reason to cabin harms strikes her as odd.

Brett Frischmann: An act that constitutes breach could also constitute copyright infringement; so why couldn’t an act that constitutes breach also violate some other law like the CFAA? Do you want to push people into engaging in contracts more, or do you want to provide incentives for people to not engage in contracts for better protection under CFAA?

Matwyshyn: wants to push towards contract. The types of harms pushed into CFAA are harms that money can fix. To the extent that there’s some other category of equitable harm that isn’t covered by the contract, we might have a CFAA argument, but in general there are other regimes with other remedies. If there’s recourse for the harm, we’re not trying to fix the harm any more when we apply the CFAA.

My comment: (I agree with Crawford’s point re: being careful not to suggest that these contracts are or should be legitimate or even enforceable on all their terms under contract law.) I am not sure that the focus on hacking in the paper is warranted: if the basic claim is that a breach of contract isn’t enough to violate the CFAA, then you might need further emphasis on the point that it rarely takes hacking of any kind to breach a contract. The case of Lori Drew’s criminal prosecution for misstating biographical data on her profile didn’t involve hacking of any flavor; even if the legislative target was all hacking, the construction of the CFAA that encompasses pure breach would be a mistake.

Christian Sandvig: interested in paper’s discussion of developmental reasons to use tech. New tech always creates freakout about social status/kids (telephone: some people worried that a white person might talk to a black person and not know it!). Moral panic/technological essentialism—talk more about that.

Matwyshyn: Paul Ohm’s myth of the superuser also fits in: the devil of our time. There’s a psychology behind it: people trying to make sense of change and focusing on the salient aspects even if they’re not that important.

Fordham, filtering

Intermediaries as Legal Filters

Moderator: Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law, Penn State University

Notice and takedown is reactive; what about proactive options, like filtering? Relates to the issue of net neutrality. Proactive filtering may serve intermediaries’ commercial interests. Deep packet inspection allows price discrimination, quality of service discrimination. Other examples of filtering: Eudora had a red-pepper scale of the provocativeness of an email. His wife, who also works at Penn State, stopped getting his emails; he had a link to his blog in his sig, and Penn State’s software determined that terms like “blogware” were automatically disallowed. Once filters are available, what does that do to the notice and takedown/safe harbor regime?

Dr. Ian Brown, Senior Research Fellow, Oxford Internet Institute & Honorary Senior Lecturer, University College London

Three examples of floundering towards information law: copyright infringement, gossip, and child abuse.

E-commerce directive: provisions on liability of intermediaries, similar to DMCA. Telecom lawyers in the 90s were very good lobbyists. Art. 12 “mere conduit”; Art. 13 “caching”; Art. 14 hosting; Art. 15 no general obligation to monitor. The only mandatory exception to the reproduction right in temporary copies is for intermediary transmission.

Movement to 3-strikes regime for users to lose internet service after 3 accusations of infringement. Driven by France. Constitutional objections: disproportionate; infringes rights to privacy, expression, association, education, commerce, civic engagement under the European Charter of Fundamental Rights. Also procedural problems: transparency, public examination of evidence, impartiality, etc. Europe has been slower to enforce constitutional norms than the US, though. It might be 20 years before we get a ruling on that—case filed 1991 on UK’s DNA database, just decided that it was an infringement on the rights of people who hadn’t been convicted.

Another problem: Data Protection Directive, driven by Germany which has obvious historical reasons for feeling very strongly about protecting personal information. The Directive applies to companies as well as governments, and even to individuals, except for a carveout for exclusively personal/domestic activities like keeping an address book. And the only real case out of this directive, Lindqvist, involved gossip on a website about a church member who had a broken leg, and that’s sensitive medical information. The Data Protection authority took her to court, and posting on a website was ruled not to be a personal/domestic use. How far can we regulate individuals as well as data controllers? Individuals are within regulators’ sights.

Blocking child abuse images. The British Telecom system blocks access to pages on a secret blacklist. This is imposed by other retail ISPs by the government in various ways. Wikipedia had a problem because one article showed an album cover deemed to show a child sexual image. UK users were blocked from accessing the article. The technical way this was done also resulted in Wikipedia thinking, because of the IP referring addresses, that everyone in England was coming from a couple of IP addresses, and because Wikipedia bans vandals’ IP addresses, English users were unable to edit Wikipedia for several days. Now blacklists are being considered by the EU, including topics like sites promoting terrorism and discussing bomb-making, with little consideration of constitutional issues.

What role can tech play in protecting fundamental human/constitutional rights? Were the recording industry attacks on P2P systems an unexpected boon for free speech, by spurring a boom in research and experimentation with systems that are decentralized and harder to control?

Can we design for privacy? Data minimization: is your data really necessary? Limit personal data collection, storage, access and usage. Anathema in the US, but a key principle in the EU. Encrypt data when it’s in the cloud, decrypt it only under user control; protect it against companies and governments.

Final thoughts: if code embeds values, we need to think about embedding constitutional values in global computation and communication systems. Why are cyberpunks so disgusted with regulation and so committed to designing disruptive tech? Disgust with corruption in the broad sense: lobbies driving legislation.

Wendy Gordon, Visiting Professor of Law, Fordham Law School; Philip S. Beck Professor of Law & Paul J. Liacos School in Law, Boston University School of Law

Her concern is methodology.

Grokster seemed to threaten the possibility of a thriving filterless internet. Tim Wu said: when the Court pinned liability on intent, it was ducking the hard questions of how important substantial noninfringing use is. Does it ever make sense to use an intent test? Her own view is that copyright is 90% about increasing the store of public knowledge, and 10% about just claims of desert. Morality’s role is often overstated, but it has a place. Is there a defense of an intent orientation?

There are certain bad acts that most of us would hesitate to undertake even if they had longterm good consequences: e.g., the trolley problem. Maybe what was being encouraged by Grokster was, really, terrible. Downloading kids may have been engaged in moral wrongs. But the underlying infringement by the kids is judged on a strict liability standard, so Gordon doesn’t think it should be ranked with things that ought to be prohibited at all costs.

Also, highly probable that claims of property in music cause harm. Standard: how would people do in the absence of the property? How would kids have fared but for this music that surrounds them, coupled with a prohibition on copying? Many are worse off than if they’d never heard the music—if someone sends music out into the world and it affects others, people need some liberty to reuse, even sometimes with exact copies. (She gave me a shout-out!) Exact repetition is part of every religion, every doctrine, the Pledge of Allegiance, every ritual. Copyright owners are not merely conferring a benefit that they can withdraw at will; others act in reliance when they integrate music into their psyches. Thus we can’t condemn uploading/downloading as a blanket matter.

Without that moral core, then Grokster’s behavior doesn’t seem so evil that it excuses us from taking longterm consequences into account.

Dawn C. Nunziato, Associate Professor of Law, George Washington University Law School

Her topic: How broadband service providers are and should be regulated in discriminating against legal content and applications. Backdrop: FCC’s August 2008 ruling that Comcast was unlawfully discriminating against P2P filesharing protocols. Communications providers as common carriers: designed to facilitate transportation/communication without discrimination—postal service, telegraph service, etc. are not permitted to engage in acts of discrimination. That’s how narrowband internet was initially regulated in the 1990s. How should cable broadband be regulated, then? If common carrier, then discrimination would not be allowed.

In 2002, the FCC decided that cable broadband was not a common carrier. What regulation, then? Regulated as “information providers,” which means minimal if any regulation. Brand X: Supreme Court upheld this. DSL and other broadband providers said: what about us? FCC said in 2005: you’re all immune from common carriage regulations. At the same time, the FCC made some broadband policy statements, according to which internet users should enjoy freedom to access their choice of legal content and freedom to run the applications of their choice. These policy documents do not establish rules and they’re not enforceable, yet the FCC pledged to act if they were violated. And these freedoms are subject to broadband providers’ discretion to engage in reasonable network management practices.

Nunziato has documented discrimination against legal content—allegations of Comcast censoring political email; AT&T prevented NARAL from sending messages to willing subscribers; Comcast blocked P2P filesharing using deep packet inspection and then allegedly lied about it. FCC characterized this as opening mail to see if Comcast wanted to deliver it, and argued that Comcast was doing this to protect its own interests in, e.g., video on demand.

Comcast complains: but we’ve been deregulated! FCC: you’re not subject to common carriage regulation, but nonetheless we have ancillary jurisdiction to regulate you, as Brand X said. Comcast: Ancillary to what? FCC: To the 1996 Telecom Act that set forth internet policy of an open internet, and to other areas.

Where are we now? A mess, caused by FCC’s decision to exempt broadband providers from common carriage regulation. These are the pipelines for the internet, and they have no business interfering with free speech.

Frieden: points out that FCC regulated cable before it had statutory authority; ancillary because it had jurisdiction over broadcast TV and cable TV had the potential to affect broadcast.

James Grimmelmann, Associate Professor of Law, New York Law School

Search engine amplification often worsens lots of internet problems, but search engines shouldn’t be targets for solutions. People have always been jerks; now they can be jerks on an unprecedented scale by allowing large-scale anonymity. Site operators have the technical power to mask or muzzle the jerks. But website operators aren’t the only intermediaries in the picture. Web pages aren’t megaphones blasted to horrified recipients: mostly people choose to visit, usually by searching. Search amplifies hate.

If we gave search engines more duties, we might hide harassment without unmasking speakers or shutting down webhosts. But: good search engines help people find the info they want, not the info other people want them to find. Ability to find info is essential to our ability to make our own decisions; it’s also economically important. Search is too important to muck up, so we need to be careful in regulating.

Good search favors active users, and so does good information policy. If you make search less useful, users can’t as easily lead self-directed lives. Crippling search gives content creators and third parties unwarranted power over search users—that is, over everyone who uses the internet. Notice and takedown would make some information unfindable, removing it from the commons. It would also be a slippery slope to making search engines responsible for whatever speech is online. We need internet-wide, general purpose search engines—key to the last decade. Fundamentally, search engines don’t want to mislead their users with half-truths and libel. (Unless, I’d say, the users want to find the half-truths and libel—compare to the argument that eBay doesn’t like counterfeiting; sure it doesn’t, at the point at which counterfeiting starts to interfere with eBay’s own credibility and profitability, but users who are thrilled with knockoffs don’t cause any problem for eBay.)

Search engines also don’t have a relationship with site owners that allows counternotification as a ready response. Regulating search would be a pretense of allowing speech—a “free speech zone” where no one finds the information who doesn’t already know about it. But speech is also about the audience—if people want to find the information, they should be able to do so. Tampering with search is second-best: if we don’t like the content, target the site, which will have better information about the quality of the content and its value.

Jerry Lewis, Chief privacy officer at Comcast: agrees with Nunziato that the law is a mess. There are real underlying technical reasons to engage in network management—congestion issues. The old management technique was content-agnostic and focused on applications generating congestion (P2P services). New technique: content- and protocol-agnostic. It looks at heavy users, and manages them directly. You can always claim free speech interests as a basis for regulation; he’s not convinced they’re important.

Comcast didn’t censor political speech; it has a spam feature and a number of customers hit the “this is spam” button on these emails. Once Comcast looked at the emails and saw they were political, they were whitelisted again in relatively short order. Comcast blocks ½ billion spam messages a day, and there’s a process to fix the inevitable errors.

Scafidi: Gordon’s argument sounds like anyone who has created something and declines to release it is acting immorally. Or maybe it’s immoral to create a bad story that horrifies people, or a jingle that sticks in people’s heads. Under this rationale, is there any justification for copyright? You may benefit enough from hearing something that even a withheld copy isn’t immoral. Isn’t it better to have loved and lost than never to have loved at all?

Gordon: What she’s talking about is part of an elaborate mental conception of the moral core of copyright. In none of this is she questioning the instrumentalist/consequentialist structure of copyright—Congress can further progress in science through copyright. But she is interested in what the moral minimum of copyright must be. One branch: is downloading a violation of the moral core of copyright sufficiently serious to avoid consequentialist weighing over whether Grokster should be shut down?

Also, she is not arguing for a slippery slope. If you take Lockean “enough and as good” seriously, that wouldn’t erode all copyright. The typical commercial copier indeed receives a net benefit even after receiving licensing fees. Scafidi overstates the dangers of the “enough and as good” condition—the condition that the property claimant not do harm to others, and that if he does harm then he does not have an absolute claim to the property.

Nissenbaum for Brown: Privacy right internationally needs to be stated at a high enough level of generality that a culturally specific definition isn’t imposed on everyone. For Grimmelmann: search engines are important, yes, but how far are you willing to go? Can we regulate search engines at all?

Grimmelmann: Purely comparative point—we should go after the site that hosts the content first and preferably.

Brown: Then what do you do if the site is outside your jurisdiction but the search engine isn’t?

Grimmelmann: That’s Yang’s point. As the regulator accountable to my own citizens, I go after the search engine. But for the good of the internet overall, we need harmonization and a set of international standards.

Goldman: Example of internet filtering—move to increasing obligations on intermediaries: cutting off online gambling by going after the payment processors. What do we think of that?

Brown: Regulation is nothing if it can’t be effective. If the US is not going to block access to specific sites, as the UK/EU are trying, then you need an alternative. Note that US trade partners are going after the US for US moves!

Grimmelmann: He thinks this is a procedural issue. Are intermediaries subject to potentially inconsistent and unpredictable litigation? But if you do it in the government, you get a secret blacklist and the process may not be sufficiently transparent and accountable. Assuming we want to ban access to X, how do we go about identifying X and blocking it in an effective and procedurally fair way?

Q: Court records—used to be friction-heavy, so openness had limited costs, but also limited benefits. Now that dissemination is frictionless, does that show that openness was always a mistake?

Grimmelmann: The courts have a responsibility to make privacy decisions; practical obscurity can no longer perform a protective function, so courts have to take new balances into account. Most things ought to be immediately publicly available, sensitive information can be request-only, and truly sensitive material can be sealed.

Brown: Grimmelmann’s suggestion is like the end-to-end rule—decisions are made at the very extremes, not by the intermediaries.

Q: Is trade secrecy a barrier to accountability, for example with filtering/search algorithm decisions?

Brown: in the EU, courts would never allow IP to override human rights concerns.

WSJ columnist embraces net neutrality

... sort of. Doesn't quite manage to use the word, but it's progress, right? He blames the government for not requiring openness, rather than concluding that Americans, uniquely, want crippled devices.

WIPIP, Panel 2

Frank Pasquale, Seton Hall Law School
From Net Neutrality to Search Neutrality: Frontiers of Equitable Information Policy
Abstract

Principles of net neutrality: transparency – we want to know if traffic is being slowed down, or if carriers are turning down controversial text messages. Open infrastructure – non strangulation principle that providers shouldn’t deliberately degrade quality of service in order to upsell the better quality, as makers of printers for home use do.

Many skeptics of net neutrality see it as an unnecessary burden. There’s been a “laissez-faire switcheroo”: Google is closer to a monopoly than broadband providers. The reductio ad absurdum is – what’s next, search neutrality? Net neutrality advocates call this a red herring, but Pasquale is interested in it. Pervasive vertical integration is a problem no matter the layer. Verizon cutting a deal with Yahoo! search is a problem, and so is Google cutting a special deal to put a company at the top of organic results all the time. The FTC has warned search engines to separate paid and organic content, but without transparency we just won’t know if that’s happening.

Google will put a notice next to your site if it appears to contain malware. If that gets you to clean your site up, great; but maybe there needs to be some sort of due process. (Later he talks about individuals’ ability to respond to their FICO scores, see election software, etc.)

Transparency: net neutrality advocates want to know whether packets are being blocked, quality of service is degraded, etc. Compare to the NYT/MoveOn controversy – we should know who gets discounts. There are parallel demands in the search engine context. Which groups and governments’ demands are acceded to? E.g., the results for a search of “Jew” on Google produce a link from Google explaining matters.

Laissez-faire claims against net neutrality: property fundamentalism (we own our platform); free speech absolutism (Red Lion is dead); Schumpeterian optimism (Google will build its own internet). And Google makes the exact same claims when people argue for intervention into its search results! Pasquale disagrees with them all. Google isn’t willing to wait for salvation through the market in the carrier context. Net neutrality can help competition.

Tom Bell: References work on the history of mandatory interconnection. Before then, people had two phones on their desks – there was competition, and then after mandatory interconnection Bell wiped everyone else out. So Google’s take on net neutrality might help it consolidate its power.

Pasquale: If you have net neutrality, you have to look at regulating Google too.

Eric Goldman: Google’s trying to have it both ways and should be held accountable. You are trying to develop a law of intermediation – the same arguments can be made against any intermediary.

Christopher Yoo: Failure to interconnect drives competition to connect everyone; someone then wins the race, and that creates a new set of policy problems. Everyone says Bell refused interconnection, but new entrants were no more interested in interconnection. Also, this isn’t Schumpeterian competition, which is vertical competition for the market – a succession of monopolies. Here, there is a drive to add a third player to a duopoly. Different monopolies at different levels can push into each other’s levels – one possible story is that those bumping up against each other are a good idea.

Pasquale: That’s a benefit of having countervailing monopolies at different levels. Maybe that’s the only hope we have – set some corporations against others.

Mark Schultz, Southern Illinois University School of LawThe Music Never Stopped: Technological Progress, Economic Growth, and Copyright
Abstract Paper

An interesting argument: performing arts are subject to the “cost disease” – productivity increases in the overall economy don’t increase productivity in this sector. A 45-minute sonata still takes 45 minutes and the same number of performers in 2007 as in 1907. As a result, performances become more and more economically unsustainable. There have been a number of responses to this argument, including claims that people spend more on art as society gets wealthier. But tour prices continue to go up, and only a few bands can make money from live performances. Copyright is a potential savior by allowing performers to capture some productivity gains from technology in the form of recorded/broadcast media and broader distribution. Basically, neither impeding technological progress nor abandoning copyright is a good idea for artists.

Tom Bell: Do we care about artists except insofar as their works are accessible to consumers? Performing costs are a red herring – we can get music from recordings, so who cares if live performance is more expensive?

A: This is a common response to the cost disease argument. You still need an incentive to produce recordings. Will we get anything if live performance gets more costly & records are no longer worth distributing?

Bell: Garageband shows that plenty of people will publish for free!

Michael Carroll: You’ve set up an all or nothing proposition: get rid of copyright or keep it. Also, the superstar effect creates a lottery effect – people will take the risk because they want to be one of the ten winning bands that makes money on tours.

A: It’s not all or nothing, though people do argue for abandonment of copyright. There is a class of performers who can’t provide music for free and can’t make a living just by touring, but could use copyright-protected business models.

My question, like Mike’s: allocatively, the rewards copyright offers suggest a shift more towards winner-take-all, since one violinist can satisfy more demand. How does that interact with the paper’s analysis? Depending on how people react to tournaments, that could induce more people to pursue artistic careers, or fewer – and either might be good for society, depending on the alternatives!

A: The long tail moderates that – technology allows people to connect with a smaller group of fans.

Q: So is the winner-take-all system more powerful in recorded media or in live performances? Which market is more skewed, and what effects does that have on incentives? We need to know more about the interaction of incentives; the long tail, after all, is profitable for retailers, but it’s not clear that it provides musicians with a living.

Glynn Lunney, Tulane University Law School
Copyright’s Price Discrimination Panacea
Abstract Paper

The paper was an example of work I like but do not remotely do. Lunney models the effects of increased price discrimination in a world where resources invested in creativity have to trade off with other investments, arguing that the most likely alternative is diversion from other creative fields in which price discrimination (or even copyright protection in the first place) is relatively less important. As a result, he shows, increased price discrimination is likely to decrease overall social welfare. I found the model comprehensible even though graphs give me hives.

Terry Fisher, in another paper, says price discrimination is socially cheapest way to achieve any given incentive level compared to uniform pricing. You can decide on the incentive level and then allow price discrimination and give less overall copyright protection in length and scope. But there are two problems: (1) the difficulty of setting the right incentive level, and (2) political economy: you never get the quid for the quo; scope keeps getting bigger.

There may be cases in which price discrimination is a good idea – addressing the costs of uniformity in copyright scope, or achieving a better incentive level – but the assumptions really matter; we need to articulate and defend the reasons why we think price discrimination works.

Q: Aren’t you assuming a lot about the industries copyright would steal from?

A: Look at other creative industries – they don’t have anywhere near the ability to price discriminate as copyright industries.

Q: Price discrimination is not the only way to appropriate extra value.

A: I don’t see copyright industries capturing a smaller fraction of value than the industries nearer to them. But this is the right debate: what are the most plausible assumptions to make about the markets?

There are always more market failures to talk about, which is why second-best analysis is so hard to do – intractable, even.

A paper from another panel:
Eric Claeys, George Mason University School of Law
INS v. AP: Hot News and Natural Property Rights
Abstract Paper

I liked the discussion at the end of the paper of the limits of economic analysis in the presence of substantial empirical uncertainty, and the ways in which economics in fact reduces to intuitions. Exactly what Lunney was talking about!

The fellowship of the net

Is it just me, or is The Tower in this ad reminiscent of something?





(And there's a video.)

HearUsNow is clearly a takeoff on a popular cellular slogan -- and since it's the name of the organization, it's probably not use otherwise than as a mark. Should it nonetheless be protected against dilution claims? I think the answer is pretty clear, but I would offer this as an example of why the TDRA's exclusions don't solve the First Amendment problems of dilution.