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stories filed under: "control"
Venture Capital

Venture Capital

by Mike Masnick


Filed Under:
control, ownership, value, venture capital



Apparently Even VCs Get Confused Over Ratio Ownership Compared To Total Value

from the and-those-are-the-VCs-you-don't-want dept

Venture capitalist Fred Wilson recently had a great post where he calls out a bunch of his colleagues in the venture capital business (not by name) for insisting on owning a certain percentage of a company in order to invest. Fred notes, correctly, that it's not the percentage that matters, but the actual value (and the appreciation of it) of the equity that one holds. In simplest terms: owning 10% of a $1 billion company is always going to be a hell of a lot better than owning 40% of a $1 million company.

But, what I find amusing -- and what Wilson doesn't mention -- is that this very argument is quite commonly presented to entrepreneurs from VCs. That is, when an entrepreneur frets about giving up a portion of his or her company, a VC will often make the point that "with our investment, we can take your company's valuation way up -- so even if you own a smaller percentage, your absolute value will increase." And it's a true argument (if the value increase happens). And, in many cases, it's the very same VCs who will use a line like this that then insist on owning a certain percentage. It makes you wonder if they believe what they're saying themselves, or if they're just using all of it as a negotiating tactic to take a larger cut of the deal.

6 Comments | Leave a Comment..

 
(Mis)Uses of Technology

(Mis)Uses of Technology

by Mike Masnick


Filed Under:
broadcast flag, control, drm, innovation, uk



Sneaky UK Attempt To DRM Television

from the not-this-again dept

Danny O'Brien over at the EFF has the details on how the entertainment industry is attempting to push through an attempt to DRM TV in the UK. It's not quite a "broadcast flag," but close enough. In the last few years, since the original fight over the "broadcast flag" ended in "failure" for Hollywood, they keep attempting to sneak it through in other ways. In the US, it's been via "selectable output control," or SOC. Over in the UK, it's a bit different, but no less ridiculous. Basically, there would be some encoded metadata with all digital TV channels, and the algorithm would be kept "secret." As Danny notes, this has nothing to do with preventing copying, and everything to do with giving the entertainment industry yet another "veto" on innovation (similar to the anti-circumvention clause of the DMCA):

In Britain, as in the United States, this proposal isn't about piracy. It's about creating a rightsholder veto over new consumer technologies in DTV.

No British commercial digital TV manufacturer would risk any innovation that might invalidate their "metadata compression parameter" license, and leave them open to litigation. And competition between devices would be limited by the byzantine requirements that DRM requires (it's notable that the BBC says the rightsholders demands came via the Digital Transmission Licensing Administrator (DTLA), a DRM consortium who would clearly benefit from mandatory adoption of its own system.)
But, of course, in an era of copyright moral panics, we'll hear over and over again about how this is all about stopping "piracy" -- even though it actually does nothing to prevent unauthorized copying.

11 Comments | Leave a Comment..

 
Culture

Culture

by Mike Masnick


Filed Under:
big ten, control, fans, reporting, southeastern conference



The Big Ten vs. The SEC: Embracing Fans vs. Shutting Them Up

from the which-one-is-better? dept

Last week we wrote about how the Southeastern Conference (SEC), a big college sports division was looking to limit how fans could interact with the world while at games. Michael Kruse, at the St. Petersburg Times did an excellent analysis of this move (and I don't just say that because he quoted me), talking about how it's really about the SEC trying to prevent the genie of "fancasting" events from getting out of the bottle, because exclusive broadcast contracts are so lucrative. While a short-sighted economic analysis by SEC officials may think this makes sense, perhaps other college sports divisions see this as an opportunity to pick up fans. CitMediaLaw points out a comparison showing that another division, The Big Ten, seems to take a very different approach, not just encouraging fans to use social media tools to broadcast their views and thoughts, but also providing linkable and embeddable videos and content to make it even easier. Admittedly, college sports fandom often has more to do with where you personally attended, but you have to think that enabling fans to help promote you is going to be a better long term strategy for building up fan loyalty than trying to actively stifle their ability to express themselves and promote the teams and events. How enthusiastic are SEC fans going to be, if every time they try to talk up their favorite team, the league threatens to sue them?

12 Comments | Leave a Comment..

 
News You Could Do Without

News You Could Do Without

by Mike Masnick


Filed Under:
control, fans, reporting, southeastern conference



Southeastern Conference Wants To 'Control Memories' Of Sporting Events; Limits Reporters & Fans

from the good-luck-with-that dept

Over the past few years, we've seen both MLB and especially the NFL try to limit how reporters can report on sporting events. This is highly questionable, in a variety of ways. Obviously, the NFL has no legal right to limit how anyone reports on event, but it was effectively holding "access" over the head of the reporters. That is, any reporter that failed to live up to these "rules" would no longer get a press pass and access to the locker room or players. This seems designed to piss off reporters, and limit the actual publicity that a sports league gets. In the past, I've suggested that newspapers who are threatened with such rules should simply ignore the press passes and start buying their reporters' tickets to report from the stands in protest.

Now, a whole bunch of people have been sending in the news that the Southeastern Conference (SEC) -- a college sporting division -- is now taking this concept to a whole new level, limiting not just all kinds of reporting that can be done by reporters, but also on any fans attending the game (thanks to Jeff T for sending this in first). The press will not be allowed to show more than 3 minutes of highlights -- all of which must be taken down within 72 hours. This includes not just the sporting event itself, but any press conferences related to the event (nice way to make embarrassing press conferences "disappear").

The much bigger issue, however, may be the attempt to stop fans from taking photos of, or discussing, a sporting event they attend. The conference will put a license agreement on the back of every ticket noting these rules -- which are almost entirely unenforceable. The buyers of the tickets will not have "agreed" to the policy and would likely have a strong argument in court that the license is invalid. On top of that, how insane is it that a sports conference is trying to stop fans from telling or showing others about a game?

Someone in the article explains the (somewhat obvious) reasoning behind these policies. The SEC (Southeastern Conference) is basically "protecting" the rights to sell TV broadcasting rights for huge sums, and it's afraid that others reporting on the events takes away from the value of it. That's wrong for a variety of reasons -- including the simple idea that limiting how people can find out about your sporting events doesn't make them more engaged, it makes them less engaged. That's less value for any big broadcast deal.

The second reason given in the article? The SEC "wants the ability to have full control of the memories that these events can generate." That's nice that it wants that. But it goes against pretty much everything the law says is protectable.

But, once again, welcome to "ownership society." With so many people pushing so hard for stronger and stronger intellectual property rights, you get massive landgrabs such as this one, that go well beyond legal protection rights, in an attempt to "control memories." That's just what Jefferson and others intended when they put "promote the progress" in the Constitution, I'm sure...

50 Comments | Leave a Comment..

 
Culture

Culture

by Mike Masnick


Filed Under:
control, dollhouse, dollverse, fan sites

Companies:
fox



Fox Publicity Department Trying To Exert Editorial Control Over Dollhouse Fan Site?

from the that's-not-how-it-works... dept

It's no secret that some entertainment companies have had trouble recognizing that fan sites help promote a show and add value to the show for free. In spite of these benefits, they still seem to have trouble with fan sites, sometimes threatening them over intellectual property violations or simply trying to shut them down. Now Blake points us to the news that someone in Fox's publicity department is apparently trying to exert editorial control over the fan site Dollverse, which helps promote the TV show Dollhouse. From the details, it really does look like a single person in the publicity department writing a too-sternly-worded letter demanding: "Moving forward do not make any further announcements on your site regarding network scheduling unless you receive notification from the network that scheduling is confirmed." It sounds like, otherwise, the network had been supportive of the site (and this didn't come backed up with any specific legal threat). However, it's still quite an amazing move for a "publicity" department to first demand that a site no longer write about stuff without confirmation, and then to later claim: "Clearing up your misperceptions of the show has become very time consuming and frankly takes away valuable time that could be spent actively marketing the series in the proper way." That's not exactly embracing the fan community.

26 Comments | Leave a Comment..

 
Ramblings

Ramblings

by Mike Masnick


Filed Under:
control, lawsuits, piracy, realdvd

Companies:
eff, mpaa, realnetworks



MPAA's Suit Against Real About Control And Innovation -- Not Piracy

from the clarifying dept

As we've been writing about the MPAA's odd lawsuit against RealNetworks for its RealDVD DVD ripping product, we've pointed out (multiple times) how it doesn't make much sense. The problem was that there are tons of much more effective DVD ripping products out there. Unlike RealDVD, they don't hobble the ripped copies. So, shutting down RealDVD doesn't do anything to stop piracy -- and if anything only increases it, as those who want to rip DVDs are more likely to just download one of those free products that don't encumber the resulting rip with more DRM. Thus, people will still be copying DVDs, and will do so in a way that is a lot more "piratable" than if the MPAA let RealDVD live.

So why is the MPAA doing what it's doing?

The EFF has stepped up with theory that makes a lot of sense: this has nothing to do with stopping piracy, and everything to do with controlling how innovation happens in the movie market. The movie studios that make up the MPAA believe that they own the movie business, and thus any innovation in the industry needs to come through them and get their approval. What Real is doing with RealDVD is ignoring the MPAA's "approval" process, and effectively taking the path of innovation out of the studios' hands.

If this sounds familiar, it's because this has what's been going on with almost all of the "anti-piracy" battles over the last decade. Napster wasn't so much about stopping piracy (which of course, didn't work in the slightest), but about the RIAA record labels freaking out that someone else (a college kid, no less) had established a much better and more efficient distribution mechanism without getting their approval and running it through their filter first.

Effectively, the Big Content players believe that they own their industries, and innovation should come from the top down through the paths that they choose. Thus, these sorts of lawsuits will continue until the management of these firms recognize that innovation is a bottom-up phenomenon. Or, the big firms go out of business. Whichever comes first.

16 Comments | Leave a Comment..

 
Legal Issues

Legal Issues

by Mike Masnick


Filed Under:
antitrust, bricking, control, iphone, lawsuits

Companies:
apple



Judge Lets iPhone Antitrust Trial Move Forward

from the not-such-a-good-day-at-apple dept

Last year, we wrote about an antitrust lawsuit filed against Apple for sending an update that disabled, or "bricked," the iPhones of people who had changed the firmware to accept outside programs. While Apple tried to push for a dismissal of the lawsuit, a judge has denied the motion to dismiss and will let the case carry on. While a full-on antitrust finding seems unlikely, there are elements of the case that may get Apple into trouble down the road -- and it all comes back to Apple's Achilles' heel: its desire to control absolutely everything, even after you've bought it. Depending on how this case works out, Apple may discover that it (legally) needs to learn to loosen the strings a bit.

9 Comments | Leave a Comment..

 
Overhype

Overhype

by Mike Masnick


Filed Under:
competition, control, iphone, kill switch

Companies:
apple



Is The iPhone App Kill Switch Really Such A Surprise?

from the this-is-Apple-we're-talking-about dept

There was a lot of fuss last week as some folks discovered a secret "kill switch" in iPhone software that allows Apple to retroactively "kill" an app that it allowed you to "buy" (but apparently, not really buy). Steve Jobs admitted over the weekend that the kill switch exists, with this gem:

"Hopefully we never have to pull that lever, but we would be irresponsible not to have a lever like that to pull."
Irresponsible? Really? That's why no other platform has a similar switch? Apparently, everyone else is irresponsible. The truth is more along the lines of this being a standard Steve Jobs offering, where he wants full control over how things are done -- even if it means removing apps you thought you had bought.

But the question is whether this is really a surprise or even a bad thing? While some are screaming "bloody murder" (or at least asking why people aren't screaming that), as others point out, if this is such a big deal, don't buy the iPhone. I agree that this isn't very smart on the part of Apple or Jobs. It certainly opens up an opportunity for competitors to point out that they don't maintain such a closed system, but it's hardly the end of the world. The more Apple makes decisions like this, the more likely people will be more open to alternatives that are coming to market -- and that's exactly what should happen. There's no "bloody murder" to scream. There's just a chance for the competition to come up with something better that doesn't give Steve Jobs the ability to pull a lever and make apps you thought you had bought disappear.

55 Comments | Leave a Comment..

 
(Mis)Uses of Technology

(Mis)Uses of Technology

by Timothy Lee


Filed Under:
betamax, control, copyright, harvey schein, technology, vcr, william patry



Copyright Battles Are About Controlling New Technologies

from the seems-like-it dept

Copyright guru William Patry has a really interesting post remembering Harvey Schein, the man who oversaw the American launch of the Betamax VCR as head of Sony's American division. That was, of course, the product that produced the famous Sony decision upholding the legality of the VCR and its "record" button. The Betamax precedent is widely seen as a foundation of the modern consumer electronics industry because it gives manufacturers confidence that they can build useful media tools without worrying about liability should their customers use the tools to infringe copyright.

Patry mentions an aspect of the case that I hadn't realized before: MCA/Universal, the lead plaintiff, wasn't just worried that the VCR owners would tape shows rather than watching re-runs. It was also planning to release a laser disc technology called Disco Vision. MCA/Universal apparently worried that a successful Betamax VCR would have undercut the market for laser discs. Schein is quoted as saying "I don't think it was accidental that the company that took the lead in fighting the videocassette held all the patents on the videosdisc."

This will sound eerily familiar to anyone familiar with more recent copyright controversies. For more than three decades, Hollywood and the recording industry have consistently tried to use copyright law to stop any technology they didn't control. In 1992, the music industry persuaded Congress to mandate cumbersome DRM for digital audio formats, stunting the development of that technology. In 1998, the music industry unsuccessfully tried to sue the MP3 player out of existence. Also in 1998, at the behest of the copyright lobby Congress enacted the DMCA, which gave content creators unprecedented control over the design of technological devices. Hollywood has used the DMCA to effectively outlaw set-top boxes that act as DVD jukeboxes.

Of course, in every one of these cases, the copyright lobby's arguments have focused on the threat of "piracy." But when they've won, the practical result has been to give content creators the power to control the evolution of media devices. And when Hollywood and the record labels control technological progress, the results aren't pretty.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

4 Comments | Leave a Comment..

 
Legal Issues

Legal Issues

by Mike Masnick


Filed Under:
control, copyright, derivative works, foreseeable use, incentives



If Copyright Is About Incentive, Should It Allow Total Control Over The Work?

from the questions-being-asked dept

William Patry points us to an interesting draft of an article by Prof. Shyamkrishna Balganesh (of University of Chicago Law School) for the Harvard Law Review concerning how the courts rarely take into account the real purpose of copyrights in deciding what copyrights allow people to do. The basic premise is that copyright is designed solely to be an incentive to get people to create new works -- and, as such, some of the powers that the courts and Congress have added to copyright seem to go well beyond that core purpose. Specifically, Balganesh suggests that copyright shouldn't prevent others from using the content in ways that the original author never foresaw, as those uses clearly should not have influenced the original incentive to create, since they were never even thought about. While Patry gives some compelling reasons why Balganesh's current argument is a bit flawed, it does bring up a variety of interesting and important questions concerning what copyright really should be doing.

Most specifically, this argument is going to become more and more important as content creation increasingly moves away from a "broadcast" model to a many-to-many "communications" model. In such a world, things like fair use, derivative works and whether someone should "own" all downstream uses become much more important:

None of copyright's current doctrinal devices enable courts to circumscribe a creator's entitlement by reference to the incentive structure that the institution is premised on. As a direct consequence, creators (and their assignees) are often thought to be 'rightfully entitled' to any revenue stream associated with their creation, whether or not it owes its existence solely to the creator and regardless of it having been developed well after the creation of the work.... Individuals will (and can) not factor the unforeseeable consequences of their actions into their ex ante reasons for acting. Consequently, limiting copyright's grant of exclusivity to uses of the creative work that were foreseeable to a creator at the time of creation is likely to better align creators' creative decision-making with their incentives.
In other words, just because your work is used in part by another to create something new and different, it often doesn't make sense to give the original creator control over that work -- especially if it has nothing to do with the original incentive to create. Somehow, I'd imagine that JK Rowling would disagree.

4 Comments | Leave a Comment..

 
Overhype

Overhype

by Timothy Lee


Filed Under:
control, net neutrality, networks

Companies:
aol, comcast, meebo



Ownership Doesn't Always Mean Control

from the network-neutrality dept

In the first post in my network neutrality series, I discussed the fear that without network neutrality rules, major telecom companies would engage in censorship of their customers' communications. I pointed out that if the government of Iran has trouble restricting the flow of information to its citizens, it's hard to imagine a company like AT&T or Verizon being able to do so. Today I'm going to expand on this point by looking at the more general assumption that the owner of a communications network has fine-grained control over the kind of traffic that gets transmitted across the wire. It's common for people on both sides of the debate to talk about network owners blocking, filtering, promoting, speeding up, or slowing down various content and applications. It's almost always taken for granted that if you own a pipe, it's straightforward to decide how that pipe will be used. I don't think that's as obvious as it might seem at first glance.

This is illustrated by a story that came out a couple of weeks ago: AOL is opening its IM network to third-party developers. This seems like a smart move, although as Matt Asay argues, they could have gone a lot further than they actually did. What's really interesting about this development is the back story. In reality, AOL's instant messaging network has been a de facto open network for years, despite the best efforts of AOL. During the first half of this decade, AOL became embroiled in "an elaborate game of cat and mouse" with third-party clients like Trillian. AOL would make changes to its own software designed to shut third-party clients out of their networks. The other clients would respond within hours with patches that restored compatibility. This went on for months, and Microsoft and Yahoo! tried similar tactics. Ultimately, all three companies gave up. The constant upgrades were annoying their own users and it became increasingly clear that the third party developers weren't going to back down.

This isn't technically a network neutrality question because AOL's IM "network" isn't a network in the traditional computer science sense. But I think the story has some important lessons for the network neutrality debate. One is that we should be skeptical of claims that ownership of physical infrastructure gives companies unlimited control over how that infrastructure will be used by users. One might have thought that AOL's ownership of its IM servers would give it the ability to lock out third-party clients it didn't approve of, but that's not how things worked out. Third party clients found it relatively easy to evade AOL's efforts to lock them out. And AOL was constrained in its options because it needed to preserve a reasonable level of service for its official client.

Second, the story suggests that not only can users evade blocks by network owners, but in many cases, the evasion techniques can be downright user-friendly. I was using a Mac OS X client called Fire at the time, and all I had to do to restore connectivity after AOL made one of these changes was download an updater and install it. I assume the Trillian experience was similar. While there are certainly some people who don't know how to download and install an update, there are millions of people who do, and these people served as the customer base for the third-party client.

Finally, it's worth noting how the third-party clients were able to respond so quickly when one of the IM networks tried to shut them out. Over time, the various third-party clients began sharing the libraries they were using to achieve interoperability with various IM networks. That meant that when AOL made a change to its protocol, just one person needed to make the necessary changes to the shared library, which was then quickly integrated into all the other clients. This allow them to respond much more quickly than if each client had to develop its own workarounds, and it was especially helpful for niche clients that might otherwise have lacked the manpower to keep up with AOL's changes.

Of course, it would be over-stating things to say that this proves that a network provider could never block applications or content it didn't approve of. But I think it does suggest that network providers would find content or application blocking more challenging than is commonly supposed. A broadband provider that began filtering its customers' traffic would get locked into a cat-and-mouse game with its customers, with the customers developing new ways to evade the filters and the network owners beefing up its filtering software. This would, at a minimum, be a headache for the firm's engineers and a source of bad publicity. At worst, it might begin to cut into the network owner's bottom line, because efforts to block certain applications would degrade the quality of Internet access in general and spark cancellations.

Indeed, we're already starting to see hints of the kinds of difficulties ISPs will face with Comcast's war against BitTorrent. One of the major results of Comcast's policy has been to accelerate the adoption of clients with "header encryption" functionality. As a result, the techniques Comcast is currently using to control BitTorrent use are likely to get less and less effective over time, and Comcast will have to spend still more money developing more sophisticated filtering software. It's unlikely that either side will "win" this cat-and-mouse game. But at some point, Comcast may decide it's more trouble than it's worth.


Other posts in this series:

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

10 Comments | Leave a Comment..

 
Legal Issues

Legal Issues

by Mike Masnick


Filed Under:
children, control, data



Should Kids Get Control Of Their Data When They Come Of Age?

from the but-Dad,-I-don't-want-them-spamming-me... dept

If you're under a certain age, websites (at least under the law in many countries) cannot collect data on you -- or are required to get "consent" from an adult first. However, that's leading to a separate discussion about whether or not kids should have the right to take back that data once they come of age. A parent may agree to share certain data about a kid with a certain website, but once that kid is old enough, what if he wants to revoke that permission? It may sound like a simple thing, but once that data is out there, getting it back is nearly impossible. Yet, some politicians are trying to make that the law, even though it will be almost impossible to enforce in many cases.

4 Comments | Leave a Comment..

 
Stupidity

Stupidity

by Mike Masnick


Filed Under:
control, copyright, incentive, olympics, protection



Copyright Out Of Control: Does Saying '2012 Olympic Games' Violate All Sorts Of Copyright Laws?

from the have-fun-with-it dept

It's been nearly two years since we wrote about the effort by the folks who run the Olympics to have British law changed to provide special copyright protection for the word "Olympics" and even "2012" (as that's when the Olympics will be held in London). This was hardly the first (nor last) time that the Olympics had gone overboard in trying to protect its brand. Years ago, they started threatening anyone who used the word, and more recently sought similar legal changes in Canada for the 2010 Vancouver Olympics (that's gonna cost me...). Over in the UK, playwright and president of the Writer's Guild, David Edgar is talking about how ridiculous all this is, specifically pointing to the Olympic committee's concern over a new novel called "Olympic Mind Games." Eventually (perhaps realizing the ridicule it would generate), it decided not to sue the author, but based on the law, it probably could have. As Edgar writes:

By declaring images, titles and now words to be ownable brands, these various organisations and individuals are contributing to an increased commodification and thus privatisation of materials previously agreed to be in the public domain. For scientists, this constrains the use of public and published knowledge, up to and including the human genome. For artists, it implies that the only thing you can do with subject matter is to sell it.
Edgar goes on to point to other similarly ridiculous attempts to misuse copyright or trademark law to prevent certain actions. The key problem here (once again) is that too many people now believe that the purpose of intellectual property laws is "protection" of the creator/owner. That's simply not true. The purpose of copyright law is to create the incentives to create the content in question. The purpose of trademark law, is really about consumer protection -- and making sure that someone doesn't buy something under the false impression that it was made and/or endorsed by someone else. Obviously, both of these require some amount of protection to make those things possible -- but in every instance, it should be viewed under the light of the original purpose of both laws. If the control is not related to the original incentive to create, or in preventing consumer confusion -- then the exercises in control should not be allowed under those laws.

30 Comments | Leave a Comment..

 
Surprises

Surprises

by Mike Masnick


Filed Under:
control, fair use, news, nfl, reporting

Companies:
nfl



NFL Still Thinks It Can Tell News Organizations How They Can Report The News

from the that's-not-how-this-all-works dept

Back in July, we couldn't figure out how the NFL could get away with telling news organizations that they could only put 45 seconds of video online that had either game clips or videos of players. This made no sense. The NFL does not have any right to determine how reporters report the news. If they conduct their own interviews with players or film their own footage, they should be able to broadcast as much of it as they feel appropriate. They also shouldn't (as demanded by the NFL) have to link back to the NFL's official website. While these may be what the NFL wants, it has no way of actually enforcing this -- as news reporters don't need the NFL's permission to broadcast an interview they filmed with a player. However, it still seems like broadcasters aren't up to challenging the NFL on this bogus rule. Reader Jon writes in to let us know that the NFL (how kind of it) has exempted NBC, CBS, Fox and ESPN from these rules. However, the reasoning isn't that the NFL never had the right to demand such things of news organizations in the first place -- but that these TV networks have already paid fees to the NFL averaging more than $3 billion a year. Therefore, the NFL figures, they might as well post slightly more video online. Of course, this is still ridiculous. If any news organization wants to film their own interviews with players and broadcast them online, that's between the player being interviewed and the news organization. The NFL should have no say at all over what a news organization can or cannot post on their website. Any news organization going along with these restrictions should have its journalistic integrity questioned, since they're allowing the subjects of a story to dictate how they present the news.

29 Comments | Leave a Comment..

 
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