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Going To Court

One big ISP (Pacific Bell Internet Services) and a couple colleges have decided to challenge the subpoenas RIAA have thrown their way.

Pacific Bell is presenting a few new and different arguments than those Verizon used when it lost a similiar case.

To keep this very simple, they have two kinds of arguments to make.

The first is that RIAA (and a couple other places) don’t have the right to issue these types of subpoenas, period.

The second is that RIAA didn’t follow the correct procedures in issuing these particular subpoenas.

For P2People, the first kind of argument is much more important than the second. If Pacific Bell wins based on the first type of argument, RIAA wouldn’t be able to issue subpoenas in certain parts of the U.S. for at least a while (see below). That will be a fairly big deal.

If Pacific Bell wins on the second type of argument, it just means RIAA will have to do the current ones and/or future ones the right way. In the long run, this wouldn’t be a big deal at all. It wouldn’t stop the subpoenas from coming.

It’s pretty unlikely Pacific Bell will win the first type of argument, since they were presented and rejected in the Verizon case. They have a better chance with some of the second type of arguments, but again, that won’t stop the subpoenas from coming.

The colleges who have contested the action are arguing on the second set of grounds. To quote the Boston College spokesperson

“The subpoenas issued by the RIAA were issued from the wrong court under the Federal Rules of Civil Procedure and did not provide us with adequate time to notify the students,” Boston College spokesman Jack Dunn said. “We are opposing the subpoenas, not in an effort to protect students from the consequences of copyright infringement, but rather to establish the proper procedures to be followed in the future.”

Let’s say Boston College wins these points. All that would mean in the long run is that RIAA would have to file these subpoenas in the local Federal district court rather than in Washington, and allow more time for responses. That’s not going to stop the subpoenas from coming.

So there are “wins” and there are wins, and as you’ll see, even real wins won’t end the story.

What If Pac Bell Really Wins

The court in California that will hear the PacBell case does not have to follow the decision or logic of the Federal district judge in the Verizon case. They could decide differently.

Again, to keep this very simple, it’s quite possible for one federal judge in one part of the country to say one thing, and another federal judge in another part of the country to say the opposite.

To oversimplify, if the California judge says, “To hell with the Verizon case, this is unconstitutional” that doesn’t mean RIAA can’t issue any more subpoenas throughout the entire United States. It means (presuming the appeals court agrees) that RIAA can’t issue subpoenas in that particular part of the United States where the decision was made until this matter gets finally settled.

In that case, RIAA couldn’t file subpoenas in the Ninth Circuit; it could in the DC Circuit, and all the other Circuits will have to decide who to follow if anybody.

What happens if that happens? This is why God made the U.S. Supreme Court. If different courts in different parts of the country say different things, they’ll usually take the case and eventually decide the issue, and all Federal courts have to listen to them.

So don’t jump to conclusions if you hear “We won, we won, we won” somewhere else. The details are important, and could be deadly if ignored.

We’ll tell you at that time how much any decision would or would not affect you.

Senator Napster

Very junior Senator Norm Coleman (he was elected just last fall in an election where the incumbent senator died in a plane crash) has asked the RIAA to furnish his Senate subcommittee with details on how the RIAA decides to subpoena.

You can see what he requested here. On the whole, these seem to be reasonable requests.

However, this senator seems to be asking for one thing, but talking quite a different game. For instance, he (and the media) seems to think that if you’re a grandparent, crimes don’t count. It may be one thing if your grandkid did it, but Bob Barnes, who seems to have become the poster child granddad of the P2P movement, and who is a whopping 50 years old is cited as a terrible example of subpoenas gone mad.

From some news accounts, you’d think RIAA targeted nursing homes in their probes, but the news stories keep mentioning the same people. I think there’s two or three grandparents out of the nine hundred so far.

Senator Coleman also apparently thinks it’s OK to steal a little, he himself did so with Napster.

Is this grandstanding? Probably. He’s not a very influential Senator, and it’s hard to otherwise get attention. But some good may come out of it. If this Senator tries to have an investigation and says, “You shouldn’t be going after these people,” RIAA can turn right around and say, “So what are you going to do about it? Your kids are ripping us off, you got a better idea on how to make them stop?” It provides a platform for DRM.

Don’t be too surprised if Senator Coleman backs off on this issue. It’s a dual-edged sword. I bet some astute Democratic operatives in Minnesota are salivating at the thought of TV commercials next election portraying a Republican as being soft on crime.

We’ve said it before and we’ll say it again. These RIAA lawsuits aren’t really meant to get P2People’s attention, they’re meant to get Congress’ attention. The lawsuits are a stalking horse for DRM.

Survey Says

Two surveys on P2Ping have recently been published, one for here one for here.

These provide a somewhat more impartial view of the phenomenon than what we’ve seen so far. Yes, the Australian study was commissioned by the Australian equivalent of the RIAA, but as you’ll see, some of its conclusions contradicts the record industry’s positions.

Some of the conclusions of these studies are:

1) P2Ping is heavily youth-oriented. The younger you are, the more likely you are to be doing this, and not caring or not capable of caring too much about the consequences.

2) P2Ping is somewhat class-oriented. Poorer, less educated people tend to P2P somewhat more than richer, more educated people. The results are muddled a bit on the youth end, where most students don’t have a lot of disposable income, but it’s not just a matter of being young.

3) P2Ping reduces record buying significantly, but not dramatically. The Australian study indicates that heavy P2Pers spend on average 17% less on records than non-P2Pers.

While this refutes the claims by some P2People that P2Ping actually increases record buying, it also refutes RIAA’s claims that most if not all of the drops in record sales is due to P2Ping and that P2Ping is catastrophic to record sales. If you extrapolate from the Australian data, somewhere between a quarter to a half of the sales drop would be attributable to P2Ping.

There’s also some indications that this is a self-limiting phenomenon. As the average person gets heavier into P2P, they may end up buying fewer records, but it’s not an inevitable slide to buying no records.

4) CD copying is at least as big a problem as downloading. Again, the Australian study indicates that more songs get passed along by hand rather than by the Internet, so even if RIAA managed to electrocute every P2Per online, it would still have a pretty big copying problem, and one less amenable to control.

The media reports on the American study seemed to emphasize the proportion of people who “didn’t care” that they were violating copyright, as if this were important. Well, murderers “don’t care” that murder violates the law, but that doesn’t stop us from prosecuting them.

The Pew study was taken before the RIAA lawsuits began, so it will not be surprising if the proportion of people (particularly those with something to lose) who start “caring” will increase, though probably not all that much.

This little statistic is important in that it exemplifies the real problem legitimate content creators face with digital distribution. You can’t sell in a thieves’ den.

People are very short-sighted. They don’t realize that in the long-term, digital distribution will save them a lot of money (though not as much as they may think). But if their general impulse is to steal (or be sympathetic) to theft if they can get away with it today, the digital tomorrow won’t come, and they’ll continue to pay a lot more for their legitimate music than they would otherwise.

They don’t realize that in the long-term, the thieves are (indirectly) stealing from them just as much as they are (directly) stealing from the RIAA and Company.

There’s two factors to be kept in mind here: action and attitude.

If we are talking about low-quality MP3s, a case can be made to tolerate that and consider P2Ping a type of radio, with higher-quality recordings being the commercial, protected product. This is what anyone serious about this ought to be aiming for. Unfortunately, the biggest mouths can’t even spell “compromise,” much less contemplate it.

However, if that distinction cannot be made, and P2Ping simply moves upscale as broadband and increased storage capacity reduces the need for lossy compression, there will be no room for compromise. P2Ping will have to be crushed, one way or another, both indirectly (through DRM) and directly (by criminalizing it through the legal system and law enforcement).

What If You Had A Protest and Nobody Came?

Did you know there was supposed to be a national day of protest against RIAA? Really.

This generated a ton of hot air and an ounce of action. If you go through the comments in the link above (where censorship by the RIAA or the media or anybody else can hardly be claimed), a grand total of two protest actions and one attempt to get a TV story were taken in the whole U.S. of A.

ROTFLMAO!!! Please.

Just the beginning? Not the best time to do such a thing? I’ll grant you that, but when fall comes and students are back in school and the lawsuits start getting filed, let’s see if the ratio of 99.9% BS to 0.1% action changes to any degree.

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Fraternizing With The Enemy

Slashdot recently invited several of the “enemy” to answer questions from the audience. They asked a Washington lobbyist who represents some big technology firms.

I would strongly recommend you read what this man has to say. What he says about how government and lobbying works is the simple truth.

It was disheartening to see some of the negative reactions to the man’s comments, which pretty much boil down to “You can’t fool me. I know how it really works (which really means, “I’ve seen enough Hollywood movies and TV shows to know better).

Geeks like simple, clear little worlds. It’s black and white, there are no shades of grey. Politics, on the other hand, is the exact opposite, everything is in tones of gray.

Do you know what lobbying is like?

You want a law passed that helps you. Now how do you go about doing that? Let’s say there are two people running for Congress. They both need money to be elected.

You talk to the first one, and he’s not too sympathetic with your view. He ends up saying, “X thousands of dollars, please, and if you don’t pay up, I’ll vote against you.”

You talk to the second one, and you find he’s pretty much in agreement with you in the area you’re interested in.

Who do you give your money to? The guy with his vote for sale, or the guy who agrees with you?

You give it to the second person, simply because you trust him more.

That’s how lobbying really works. You find your friends, and you give them money to keep them in office. If they’re particularly powerful friends, you give them more money. It’s not as dramatic or capable of demonization as a payoff, but if done successfully, it yields the same results.

Is that bad? So long as the U.S. or any government has power, you’re going to have lobbying in one form or another. Period. If you went to public financing of campaigns, it would just be done a different way, and money would be spent indirectly rather than directly to influence Congresspeople.

In any event, right now, that’s the game, and if you don’t play it, you lose.

People think “well, we don’t have the kind of money RIAA has.” This is true. You have far, far more money than RIAA could possibly spend on legislation.

The RIAA’s political action committee spent $1.2 million in contributions to candidates and political parties last year.

If the EFF estimate of 60 million “file-sharers” is correct, you could raise $1.2 million if every one of them gave two cents each.

That’s unrealistic, but if just one out of a hundred P2People, that’s just 1%, gave two dollars each, they’d match RIAA.

If a million file sharers gave the price of a single CD to such a political fund, that would be over ten times the money RIAA spent, and would be in the range of what Microsoft spends.

Think it can’t be done, getting a little money from a lot of people, then using it? In a word, AARP. You want to talk about an evil organization from the perspective of a teenager or young adult; it’s them. You’ll end up paying a lot more in social security and Medicare taxes to support the people they lobby for than you’ll ever give the RIAA and Company or even the dreaded MS.

But they’re not lame, and you are. Sorry, but that’s the simple truth.

Hell, if all the P2People did was charge a tax of one cent for each word of hot air found in forums, not only could you match, beat, and whip RIAA’s efforts, you’d probably could buy their employers.

The Most Stupid Of Them All

I’ve seen a lot of ignorance and stupidity on this issue, but it’s been run-of-the-mill, everyday stupidity.

But as someone once said there are some things so stupid that only an intelligent person could believe them.

For instance, about twenty years ago, onw writer suggested that sexual intercourse be outlawed. Period. For everybody, willing, very willing, tearing-off-your-clothes willing. According to the author, it just wasn’t politically correct to do that sort of thing, so it should be banned.

Let’s face it, that kind of stupidity is to normal stupidity as a nuclear bomb is to a Bic.

Someone alerted me to this article, which at least rivals in its own way the sexless world envisioned by that author.

The article basically says:

  1. Form a mutual company.
  2. Buy one CD each of everything out there.
  3. Sell downloads.
  4. Make it a public company, and watch the stock price skyrocket, because it would an immensely profitable business.

This would be soooooo illegal in so many ways it isn’t funny. This would make P2Ping look like something Joe Friday would do.

I could say the umpteen reasons why not in mind-numbing page after page, but my eyes would glaze over reading it, much less yours.

I’m sure it would be a very profitable business. When you sell things and don’t pay for them, that eliminates a huge cost of doing business.

It’s not every day you see a scheme that make the RIAA and Company look like Santa Claus, but this is one of them. To put this very, very simply; this would tell artists. We’re going to use your prior work, but we’re not going to pay you any royalties for it. If you want to be paid by us for future work, you’ll have to sign a deal with us.

The evil, evil record companies lay out a lot of money in advance for artists to produce and promote their work and for their own pocket. These advances to the artists (along with other expenses of the record company proportioned out to the artists) are paid off by royalties earned on each recording sold. Artists get credited for every recording sold.

There is something to be said about the claim that the royalities artists receive from recording is rather too low, and the record companies in essence act like a shady finance company charging exorbitant interest for the money they put out up front.

But what would the “good guys” do? They wouldn’t pay artists any royalties (and this is supposed to be legal?) for any past recordings, no matter how much money they made from them (at least the record companies laid out money at one point, and at least credit the artist for royalties to reduce their debt).

For future recordings, you would get a royalty deal that would be at best about half what the evil, evil record companies have to offer. No advances, no support.

This would make the RIAA look like Santa Claus in comparison. What artist is his or her right mind would settle for half the money they could get elsewhere? Oh, if you don’t sign with us, we’ll just buy a couple CDs, and that’s all you’ll get from us.

It’s both illegal and ludicrous.

A New Satan In Town

A new head of the RIAA, Mitch Bainwol, has just been appointed. No, you didn’t drive the old one out, she had announced she was going last year.

You need know just one thing about Mr. Bainwol. He has no background in the recording industry. He has tons of background in the Congressional industry.

Take three guesses which the RIAA finds more important for their head to have for the next few years. They’re getting ready for full-court press.

I meant “new Satan” sarcastically, but others mean it quite literally. The demonization of RIAA and Company has increased exponentially the last few weeks, and the tones are getting more and more hysterical.

Beware of this.

If you really think your opponent is Satan Incarnate, it makes it much harder to deal with him or compromise with him. Nor is it terribly persuasive to those who don’t see horns growing out of your opponent’s heads.

You’d be much better off doing some serious homework to explain why your opponent is wrong rather than Satanic.

Satan Is Tax-Exempt?

Why, yes. 🙂

This article points out that the RIAA is a tax-exempt organziation.

This is quite correct.

When most people hear the word “tax-exempt,” they think about charities. While that is one form of tax-exempt organization, there are many others.

Tax-exempt organizations are often described by where they are described in the Internal Revenue Code. Charities, for instance, are described in section 501(c)(3) of the Internal Revenue Code, so they get called 501(c)(3) organizations.

Some other examples of tax-exempt organziations are labor unions 501(c)(5) and business leagues 501(c)(6). The RIAA is considered a business league.

What’s the difference between these types?

To oversimplify, if you give money to a 501(c)(3) organization, that is an amount that is considered deductible on your income tax. You generally cannot do that when you give money to non-501(c)(3) organziations (though businesses may be able to deduction dues to a business league like the RIAA as a business expense).

The purpose of a tax-exempt business league is to promote the interests of the particular business the members are in.

The article suggests that people write to the IRS and suggest that the RIAA should lose their tax-exemption for filing these lawsuits, but that is a complete waste of time. Taking legal action to protect the interests of its members is a perfectly legitimate activity for a business league.

Can 501(c)(6) organizations engage in lobbying activities? Yes. A lot of lobbying activities? Yes.

Can they make contributions to political candidates? Yes. I think RIAA has set up a separate organization for campaign contributions, again, quite legal.

On the other hand, the EFF is a 501(c)(3) organization. Contributions to them are tax-deductible. However, 501(c)(3) organziations can only engage in legislative lobbying to a limited degree, and can’t engage in political activities at all. See here.

So if you make a contribution to EFF and expect most or all of it to go to legislative or political activities, it won’t. They’re not allowed to do that.

However, EFF (or anybody else) could form what is called a 501(c)(4) organization for that purpose. The organization could do all the lobbying it felt like, but contributions would not be tax-deductible.

It should be pointed out that just because you make a tax-deductible contribution, that doesn’t mean you can actually deduct that sum on your tax return. Generally, you have to be able to itemize your deductions on your Federal income tax to get any tax benefit for such a deduction. Most of those Americans reading this probably claim the standard deduction (or may not have to file a tax return at all)

If you’re not an American, your national tax laws would apply. I would be surprised if you could get a tax benefit donating to an American charity.

A lot of people are associating EFF as the headquarters for the P2Pers. As they’re currently organized, they can’t be for these particular activities. You might want to suggest to them that they do the paperwork in order to do so.

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