(Author’s note:  In this article, I get to use one of my favorite theories:  The Sergeant Schulz Theory.  Read on.  Also, I posted this initially at Tubefilter.tv.)

By now you probably know that Google won the most recent round of its legal battle with Viacom (which initially sued YouTube, now owned by Google).  A federal district court judge in New York issued a summary judgment that dismisses the $1 billion claim of infringement against postings on YouTube that were, in the opinion of Viacom, infringing on their copyrights.  It’s an opinion worth reading. [LINK HERE.]  If you are a legal wonk, then you will appreciate the succinct manner in which Judge Stanton weaves together the holdings of previous DMCA cases. (Here’s a hint: The Coase Theorem.)

The judge bought the argument that Google made—namely, that it was protected under the “Safe Harbor” provisions of the Digital Millennium Copyright Act from the copyright infringement claims made by Viacom.  More important, Judge Stanton said that YouTube’s actions demonstrated that the “takedown” provisions in the DMCA actually worked.  (Those provisions enable copyright holder to require that copyrighted material to be removed from public view.)

There are some unintended consequences (the Sergeant Schulz Theory) that may arise from this opinion, but they are likely to be acceptable for the time being.

It is not over yet.  Viacom has vowed to appeal the decision.

So What?

In a nutshell:

The burden of policing copyright infringement now squarely sits on the shoulders of the copyright owner (or the one with the rights).

With a little more detail:

  • The Safe Harbor Is Open. The DMCA safe harbor provisions are available for certain types of companies if they have and actually use the takedown provisions of the DMCA.
  • You Are Your Own Policeman. If you own (or hold rights in) a copyright, then you are responsible for policing the use of that copyright by others.

The Details

Let’s go a bit deeper in what the opinion means.  The merits of the positions of either side are not relevant here.  What is relevant is what the opinion means to players in the digital content space.

1.         Companies like Google Have a Safe Harbor. Companies that post digital content can rely on the “Safe Harbor” provisions of the DMCA when that content is posted, provided that they are serious about taking down content that may be infringing (more on that point below).  This holding is important because there was some confusion as to whether or not a company like Google was actually permitted entry to that harbor.  One view of the DMCA provisions holds that it applies almost exclusively to ISPs, but this view now appears to carry little weight in the federal courts.  Getting there was not without some abstruse legal reasoning to adapt the language of a statute written before places like YouTube existed, but it is probably solidly established by the various legal opinions on this point.

But be careful: It is not clear what sites would have this protection.  Google made the (winning) argument that, in essence, it was just providing transmission, storage and indexing of the content—sort of like an ISP.  Another UGC site might not be so lucky.  For sites that aggregate content from other sources, this opinion may incrementally strengthen their position, but they would have to fight holdings going the other way in other courts.

2. The Safe Harbor Has Some Rules. Judge Stanton emphasize that the takedown procedures worked in this case.  YouTube immediately responded to Viacom’s takedown notice:  Within 24 hours of receiving the notice, YouTube removed almost all of the more than 100,000 clips that Viacom claimed were infringing.

So the implication is clear for companies posting digital content: The Safe Harbor is available if and only if your takedown procedure actually works.

3.         Red Flags and Knowledge. The opinion also turned on the “red flags” of infringement that would be enough for YouTube to take down allegedly infringing content.  It gets complicated but Judge Stanton accepted (and essentially paraphrased) Google’s argument in its court filings that there was no practical way to check every posting for infringement.  The opinion essentially holds that a company in the position of Google’s YouTube basically has to have notice or actual knowledge of infringement of specific content.  Although the judge did not say it, the standard for actual knowledge would be, say, that Eric Schmidt (head of Google) went to the YouTube site and watched Iron Man the day after it was relased.

So the rule is: If you receive a takedown notice about specific content or if you have a really, really good reason to believe that it is infringing, then take it down.  Immediately. Then you’ll be OK.  (True, taking something down can cause other problems but that’s outside of the scope of this article.)

4.         Unintended Consequences:  The Sergeant Schulz Theory. Remember Sergeant Schulz on the TV show, Hogan’s Heroes?  He knew nuzzeen, he saw nuzzeen and that way he did not get in trouble with his superior.  Think about it for a moment:  If the opinion says that if you don’t know about the infringement then you don’t have liability.  Therefore, if you don’t try to find out if something is infringing, then you’ll be OK.  By definition, you see nuzzeen if you don’t look too hard.  And so you won’t.

5.         For Copyright Owners: Spend All Your Time Scouring the ‘Net. The implication of the opinion is that copyright owners (or the rightsholders) must now police the use of their copyrights.  Their first remedy for companies sitting in the position of Google’s YouTube is the “takedown” procedure specified in the DMCA.  It’s a clunky system, to be sure, but it is pretty much all you have.  Moreover, other recent opinions are now shifting the burden of policing the use of IP rights to those who hold such rights.

There is some hope.  First, as noted above, it is not clear that all sites can avail themselves of the Safe Harbor provisions.  For example, one could argue that Facebook would not qualify (a tall order).  However, the burden of proof now probably rests with the plaintiff and judges now have a well-reasoned (though not necessarily correct) opinion on which to rely.

Second, the holding now opens up opportunities for companies (say, startups) to create Internet policing services.  Whether they are automated (think “watermark”), manual (think outsourcing to foreign countries) or a combination, there is now a market opportunity.  There are already several such services out there.  They aren’t foolproof but they are good.

To close, the decision is not exactly binding on anyone except those within the district of the New York court.  Plus, Viacom’s vow of an appeal makes the permanence of the holding somewhat uncertain.  Both of these points are largely legalistic, because the opinion, as it now stands, will be used as an important bulwark of any argument in court by a defendant to a claim of infringement.  The bottom line:  Assume it applies.

Summary:  The Tribune Company just launched Tribune 365 (www.trb365.com) that claims to provide integrated marketing campaigns—that is, ads across multiple platforms available within the Tribune media—newspapers (e.g., The Chicago Tribune and The Los Angeles Times), other print outlets and television stations.  In fact—and probably more important—it represents integrated ad sales:  one team to sell ad inventory across all of their platforms (and, with hope, others, as well).  We think this is a brilliant step—and long, long overdue.

The Details.

It is pretty straightforward—and both astonishing and understandable (OK, OK, so it’s a contradiction:  Call it a paradox)—that a major, and heavily indebted, media company has finally figured out one of their biggest assets:  multiple platforms.  The Tribune Company’s initiative is called Tribune 365 (www.trb365.com).

Selling ads across these platforms to an advertiser in what the ad industry calls “integrated ad campaigns” becomes a lot more attractive.  More to the point, they overcame one of the biggest obstacles, which is the silo-like ad sales structures of newspaper ad teams selling their ads, TV station ad sales teams selling their inventory, and so on.  Media reports point to a recent campaign for Target, with ads in newspapers, on Tribune TV stations and Tribune websites.

So What?

“Integrated ad campaigns” are not that new but what is new is that they are now available where they count:  where the inventory resides.  This makes it likely that we will see them with more frequency.  Moreover, think about it for a bit:  What the Tribune is doing is a classic case of the model that like very much, which is “audience integration.”  That’s what diversified media companies do best.  They bring audiences to advertisers.  The more diversified they are then the more audiences they can aggregate.

Aggregation recognizes that audiences get their content from multiple sources.  While there may be some overlap (someone who reads “The Trib” and watches a Tribune TV station), there are many people who use one medium and not another.  If those media happen to be owned by one media company, why not place ads across all of them?  That’s audience aggregation.

It’s not always so simple.  We have often seen civil war break out in media companies among the ad sales teams.  The sales team responsible for TV ad sales rebels when the website sales team for the TV station calls on the same clients for their inventory.  It can get ugly.

And it is understandable, because you are dealing with the livelihood of salespeople.  Someone who has cultivated the ad agency (or internal ad buyer) of a large advertiser for years relies upon the sales commission to pay the mortgage .  Why should he or she let a competitor—even someone in the same corporate family—put the saleperson in financial jeopardy?

And (we hope) that’s what the Tribune Company has figured out.  We hope that the integrated sales team means that commissions are not limited to one medium because that is the only way that you can (and should) change the ad sales culture.  After all, ad revenues amount to the lifeblood of most media companies.  And selling ad inventory makes that lifeblood pump.  And earning those commissions is what enables the sale of that inventory.

Summary:  With congressional and administrative attention now on the online advertising industry, the industry is responding with “principles” to continue self-regulation.  Whatever the outcome of the debate now underway, TOUs and EULAs will change.  To the business side of digital companies, these are boilerplate:  To the lawyers, they should be seen as what they are–binding agreements with end users and that have serious consequences if they are too one-sided.  You can read the entire report atwww.iab.net/behavioral-advertisingprinciples.

The online advertising industry has responded to the February 2009 FTC Staff Report on the topic (which is called “behavioral advertising”).  That industry created a report on “principles” for managing these data.  These principles represent an attempt to maintain the self-regulation structure now in effect–something that has not made regulators happy (rightly or wrongly).

You can read the report at the URL above.  Here is our take on the principles:

  • Ad Industry Mobilization–the mere fact that disparate industry associations have gotten together is good news, because these people have great experience and expertise to apply to a topic that is really pretty nuanced.
  • No More Fine Print–well, everyone can dream.  It is not so much that the industry will eliminate dense legalese in TOUs, but that the language is supposed to be drafted to be transparent–providing genuine guidance that end users can understand.
  • Actual Innovation–The report includes one innovation:  an “approval” toolbar on browsers.
  • De-identification of data–this is the one we like the most.  Finally, the ad industry is beginning to recognize that the data can be extremely valuable in their aggregate form, without recourse to knowing about the actual individuals.  Pay attention to this one.
  • Sensitivity–This principles recognizes that not all data are created equal and some are more sensitive than others.  Think of medical records.
  • Material Changes–gone will be the days of unilateral retroactive changes to TOUs.  Actually, this is just a recognition that the Federal Trade Commission (FTC) will win on this point and that courts are moving in that direction, as well (See blog on Blockbuster case).

So What?

From a legal perspective, this will add more pressure on companies to change their TOUs, but from a strategic perspective, it is one more piece of the evidence of the growing appreciation–not of the data themselves but of their complexity and vast value.  In other words, it is no longer an either/or debate:  either the industry gets to collect everything or nothing.

Therefore, think about what kinds of data your company wants about use (and not necessarily about each end user).

(See some TOUs, etc., we have drafted: www.npbn.com and www.photospin.com for some examples.)

On May 4th I will be participating on the panel “Media Asset Valuation in a Down Market” as part of the Media, Money & Technology Symposium of the DigitalHollywood 09 conference, May 4th through May 7th in Santa Monica.  http://www.digitalhollywood.com

I will be discussing some of the due diligence minefields, especially in licensing agreements that serve as the basis for ownership claims (and therefore value) on media assets.  Ping me for more information.

Ping me .  For the fun of it, try Twitter:  globalcapjcr

Summary:  In what may be a variation on the model of the RIAA campaign against illegal music downloaders, AP has launched an assault on the “free” use of news on the Internet–not just their feeds but, apparently headline links.  A part of this assault is a suit in US district court in New York against All Headline News Corp., a news aggregator.  That court just denied a motion to dismiss the suit, applying the principle of “hot news” to online news for the first time.  One point for AP.  That decision and the legal theories underpinning the “assault” are connected.  Add another point for AP.  (Please note that a copy of this entry can also be found at digitaldumonde.wordpress.com and globalgeneralcounsel.wordpress.com)

AP recently announced that it is fed up with the misuse of its news feeds-an understandable lament given that its customers (newspapers) own AP.  You may be hearing echoes of the famous movie, Network, and they are more than echoes.  At the annual AP board meeting, the chairman, Dean Singleton said “We are mad as hell and are not going to take it anymore.”

We take no position on whether this is a good or bad thing.  Many, many talking heads (“typing hands” for a new name for bloggers?) are decrying what they see as a frontal assault on the doctrine of “fair use.”  We do not see it that way.  We do see it as an opportunity to clarify not only the application of that doctrine online but also a way to discuss, and eventually clarify, the appropriate business models for online news and information.

A Few Details

They plan on policing the misuse of copyrighted material.  How is a matter of speculation.  AP has signed up with Attributor, a company with technology that can track use of digital information (stories and photos) that have a digital “fingerprint.”  Armed with that information, AP could demand some portion of ad revenues from sites using the offending materials in a manner beyond the limits of the “fair use” doctrine.  (You heard it here first, by the way.  We wrote several weeks ago that demands by newspapers for such revenue are not unreasonable as a move to increase revenues for online newspapers.)

Fair Use May Change.

We get it.  We might not support the approach (and we might also support it) but fair use has been strained to, if not beyond, the limits of credulity to justify online use of information created by others, for which the copyrights are also owned by those others.  In these situations-where a legal doctrine lags too far behind market development-the doctrine becomes the focus of legal assaults and the consequences are a changed doctrine.  Regrettably, the public debate on this matter has begun to take on ideological “hate” language that relies more on ad hominem attacks than reasoned analysis and argument (in the “rhetoric” sense of that word).

The First Salvo:  All Headline News.

AP is going after All Headline News, a news aggregator.  They have been accused of stripping attribution (including copyright notice) from AP articles and re-publishing them without any changes whatsoever.  Again, we take no position on what they are doing.  AHS filed a motion to dismiss, which was denied by the district court in an interesting opinion.

Why?  Because the court anchored its action to the “hot news” doctrine from 1918 (an opinion from a case that arose from the start of the business of the real-life model of our favorite film character, Citizen Kane).  There, news that is so “hot” (like breaking news) becomes the quasi-property of the people creating the news stories in the first place.  Whatever your opinions on the doctrine, this is the first time that “hot news” has been applied to the online news world.

So What?

We discern a certain theoretical strategy behind AP’s approach, something that seems to have escaped notice with all the screaming against AP now underway.  In a sense, hot news can become something of an argument against a “fair use” defense.  That is not quite it-but we will leave that sentence in, anyway.  Rather, finding the applicability of the doctrine, the court gave AP the basis for arguing “misappropriation.”  That can become the basis of a legal theory that differs from mere infringement.  In a simple manner, it can be explained that the word is the civil law equivalent of “theft” in the criminal context.  Putting aside discussions of legal theories, strategies and tactics, the opening into this legal argument carries with it the potential of using “freighted” language to use in the PR battles that AP faces and will continue to face.

Information Wants to Be Free??

That rallying cry has energized much of the discourse that coincides with the explosive growth of all things digital.  Whether something as diffuse as “information” can be called something singular in that context is one thing;  whether it can “want” anything is another.  But that’s not our point.

There might be a tectonic shift underway (OK, warning: Now we’re getting really speculative).  Most obviously, the collapse of the newspaper industry alarmed people (OK, primarily the pundits and shareholders and employees but you get the point) enough for alternatives to “free” to be openly discussed as new (or recycled) business models.  At an even more abstract level, the conservative interpretation of the “free” market is now in retreat (rightly or wrongly is not our point), and so also might other ideological positions that tend toward a libertarian bent.

We don’t know.  But we do know that AP has a fight ahead of it–and it is a good fight.  The outcome might not be what AP wants-or what anybody wants-but it will be a changed world because of it.


Summary:  European newspapers are figuring out how to survive–even using an old concept.

We have posted quite a few blogs on newspapers (see others at digitaldumonde.wordpress.com where a different version of this entry is posted).  No, Chicken Little, the sky is not falling in the newspaper world, though it does look a bit cloudy.  Look around you.  Try Europe, for starters.

Premium Services, Not Premium News Access.

One approach is to provide premium services.  In Norway, you can pay a hefty price ($90) to join a weight-loss club that is part of a newspaper website.  Your profile on the site can be updated but only for another fee.

Now, paying to upgrade your profile may be a bit much (unless the weigh-loss membership has not been successful) because of the nearly ubiquitous networking sites, but the point is to offer other services for a fee.

US papers tried this approach but in a different manner:  They charged a premium for access to certain news.  (One site, about which we have written, http://www.globalpost.com, charges a premium for additional news AND access to the editorial meeting, of a sort, and access to the journalists themselves).  Think about other services.

The Old Horse of Repurposing Content

Axel Springer, a large player in the publishing space, revived an old concept, which makes perfect sense:  Write once, distribute many times.  Write the article and post it on multiple sites.  This is the old concept of “repurposing” content for different platforms and different audiences.

Data as a New Source of Revenue

Newspapers make money not be delivering news but by delivering audiences to advertisers.  Few things are better than granular data about audience interests.  The more platforms on which your news is available, the more granular those data.  Advertisers like that.  They will pay for that.

Perhaps losing weight through a club run by a newspapers does not sit well with your idea of reading weighty editorial pronouncements.  But something else might.  Newspapers thinking this way create what their advertisers want:  connections with their potential audiences.

And some of them may lose weight, too.

Oh, and if you want to think about the ramifications for licenses then go to globalgeneralcounsel.wordpress.com.

Summary:  Real life experience of data being collected for one purpose being used for other purposes–adding to the argument that data mining is just beginning.  And, when you can do something about it (like own it or get access to it through a license in your agreements) then you should.

Two articles in a recent issue of The Economist added (at least in my mind) to the thesis that we are entering an era when the slicing and dicing of data (OK, OK, call it data mining) will yield actionable results and meaningful rewards.  The issue was February 28, 2009.

To reiterate my point in other blogs, it is not so much the results of the studies that are interesting but the fact that data collected through new digital systems for one purpose were used for another purpose.

Permit me to address the first one, on social networks as a source for data analysis.

Facebook and the Dunbar Number (Hint:  It is not 42)

First, forgive me if I get the facts wrong (but they are not the point here).  Several years ago a professor posited an upper bound (on average) of the total number of people in a social network.  That is the Dunbar number.

Later, a Professor Marsden confirmed common sense that there is a much, much smaller “core” network.  The Dunbar number is 148;  the Marsden number is around ten.  (By the way, the Dunbar number has been surprisingly stable over history as an organizing unit for groups like armies, etc.).

Online social networks make social networking more efficient to create and sustain.  (The conclusion of the studies cited is that they do not affect these numbers, but that is not germane to the point of this post.)  Crunching the numbers from Facebook confirmed (pretty much) both the Dunbar Number and Marsden’s core.  The average network is about 120 (close enough to Dunbar) and, by looking at proxies for interaction (proxies are another theme of mine), the core number worked out to be about seven for men and ten for women and in some circumstances somewhat higher.  (Please keep in mind that these are averages:  Your mileage may vary.)

The Method Is Not Madness

The analysts looked more closely to determine the core.  This is where it gets interesting.  They used responses as proxies for interaction–that is, leaving a comment or otherwise communicating with someone who has communicated with you.  (It turns out that there are cultural or national differences, by the way.  For example, in research for a long time on this core it has been known that American men tend to have a very small circle of people with whom they regularly discuss important matters–smaller than other nationalities (this is, after all, a British magazine).

You can imagine all sorts of variables that affect these numbers.  That is true.  There may be more interaction between two people flirting;  there may be more interaction between family members;  and there may be less interaction among co-workers based on their rank.  Time of day, amount of alcohol–you pick–may also affect these numbers.  (These points were not raised in this article–I am just mentioning them).

So Test for It

But that is not the point.  You could test for–or control for–any number of variables.  Now, think like an advertiser, or a publisher that wants to increase the value (and thus the price of advertising) for the advertiser.

(Note to readers:  To anticipate one concern, the analysis does not have to include PII and can–and should–be done in full compliance with the strictest of privacy policies.)

You could cross-check any number of such users to see the overlap of interests.  You could check those overlapping interests against geographic distribution over time and then over demographic data (of the group) such as number of males in given age cohorts and then demographic data for the region(s) such as the baseline of behavior for such cohorts, etc.

An advertiser could then check those results against its sales or marketing efforts in the region or, for that matter, its marketing efforts to that group on that social networking site at those particular times.

OK, these insights are not entirely new.  Many search and ad companies have been doing this sort of thing for a few years.  What has not happened is that advertisers (and their gatekeepers, the ad agencies) have not yet embraced the power of these kinds of data analytics.  In other words, it has not yet gone mainstream.

So What About Dunbar Numbers?

I have not yet figured out the import of the actual Dunbar Number (looks like a constant to me) when it comes to monetizing data.  One thought is a kind of “data threading.”  Assume that people belong to several, if not many, groups.  One could trace the overlapping interests across the groups, not to mention the overlap of group memberships, as well.  Here we are not necessarily talking about social groups (“friends” in the parlance of Facebook and “Contacts” in the parlance of LinkedIn).

For example, I belong to some groups in which a few of those members also belong to other groups of which I am a member but they also belong to other groups of which I am not a member.  Some number of those members share my interests;  some number do not.  These overlaps could be “threaded.”  And, they could also be tested over time.

The Conclusion, Please

OK, OK, I am way over my self-imposed word limit.  Perhaps you get the point.  I will post on the second article soon (about crowds being analyzed by CCTV).  This should add weight to my point that your agreements should get you access to anay data collected in any digital deals you do.

And, yes, as a result, expect CPMs (and monetizing online experiences) to rise.

We are trying an experiment here.  Rather than rewrite a post we have made on another of our blogs we have set forth the link below.   That blog is for general counsel but the point is applicable to topics covered in this blog, as well.

Here is a summary:

An article in The New York Times Magazine on Sunday March 14th on basketball provides an object lesson that you should own whatever data may emerge from any digital initiatives memorialized in a legal agreement.

http://globalgeneralcounsel.wordpress.com/2009/03/21/data-the-new-york-times-basketball-agreements/

Why this matters:  traffic=ad revenues.  Scraping gets riskier.

Last month, the New York Times Corporation settled a suit brought by Gatehouse Media Inc., which runs websites for 125 Massachusetts newspapers.  The NYT\’s Boston Globe was essentially scraping the Gatehouse sites.

Technically (and this distinction is important), the Globe site was returning readers TO the page of the article.  Gatehouse complained that readers were bypassing the ads on the home page.  This is interesting.

Intuitively, one would think that a large number of readers who were returned to the Gatehouse site (albeit at a subsidiary page) would in fact go to the gatehouse homepage.  But no, Gatehouse wanted more (rightly or wrongly).  It also turns out that Gatehouse could figure out how to block this process, which probably led to theNYT offering to settle–so as to avoid case law that goes against them.

So what?

Sites regularly scrape or otherwise link to other sites–usually to the subsidiary pages.  We get a lot of people asking of us if they can do it.  Well, this case—though settled and therefore not an opinion for purposes of precedent–suggests (to no one\’s surprise) that doing so will subject you to legal challenge that will cost a lot to defend.

It makes sense, too.  Again, no opinion as to whether it is right or wrong, legal or not, but common sense should tell us that people who own the rights and go to the trouble of posting content where they want it posted should be able to control access to it.

Of course, Google is another matter.

And, by the way, there is already case law in Europe iin support of Gatehouse\’s position, so where it is done will also make a difference.

As of St. Patrick’s Day, much had already been written about the “death” of the Seattle Post-Intelligencer print edition, which the parent company, the Hearst Corporation, shut down on that green day. The paper is now web only, with twenty in the newsroom, down from about 160. This is not the only news about newspapers these days but, to me, what is most important is the content plan of the P-I site. Here’s my take: Little original content (weird). Include existing blogs (good but unstable; if they are that good they will leave for a better gig.) Links to other sites: While many news sites do this, is it really wise? Link to other sources within the Hearst family (see below). Local government officials as columnists: Now there’s a thriller. Snore. Hearst magazine content: This is a good idea. Hearst owns numerous magazines. Repurpose the content AND link to the magazine sites. Keep the traffic in the family. This is probably a good idea. How they will differentiate themselves from the sites of local TV stations remains to be seen. At least the inclusion of commentary may make it fresh. What seems to be missing from the reports of the plans are social networking and UGC functionality. Local Little League teams or AYSO teams should be invitted to create their pages there. It would cost the P-I little to enable such additional pages to be created. In that approach, they could become something of a virtual community center. But whatever direction they take, they should build a brand–or build on the brand they have, which is a pretty good one. And, the good news in all this: the newspaper industry now has a testbed–one of many more to come in the very near future, like the next couple of months, given the terror felt (rightly or wrongly) by newspaper corporate owners. Long live the paper! Full disclosure: a variation on this blog will be (or has been) posted on the blog “Convergent Realities” at http://www.thectcnetwork.org.