There’s been a lot of guff talked about “convergence”. The media saw it coming years go, but like WAP on mobile phones or 512Kb “broadband” it was oversold and misunderstood.
2007 sees the European launch of both the iPhone and PayStation 3, touted as the ultimate converged devices. We’re no longer waiting on new technology to revolutionise the way that rights are exploited. The technology has arrived: fast connections over the Internet or mobile are now ubiquitous and the requisite hardware is now multi-functional. Convergence is already upon us.
Industries that once thought of themselves as stand-alone now find themselves butting heads with others (some old timers, some new comers) in the same (virtual) space. Publishing is no longer simply a matter of hardback and paperback. Television is no longer just terrestrial versus satellite and music is just everywhere, released forever from the limitations of the compact disc. How long before my toaster has MP3 compatibility?
The law is changing in all relevant areas, be it in media regulation, prize competitions, gambling or copyright law. It will be those companies who strive to find new commercial opportunities who will benefit most from this new environment.
Telly on your mobile, films on your PC and iPod. Advertising and sales promotion in strange new forms. The potential is limitless. The future’s bright...*
THE WEB’S CRAWLING
Spiders, Ants, Crawlers, Robots, Bots and Intelligent Agents are all names for programs used by search engines and aggregation sites to gather information from the Internet. They crawl the Internet scanning web pages 24 hours a day, 7 days a week, 365 days a year to find and collect key words, text and URLs for storage in a searchable index.
Most websites want to be found by search engines and clamour to get top rankings on Google, Yahoo and MSN Search. Search engines are the main way Internet users find information and cause little concern except, perhaps, in the area of caching, where search engines store web pages to ensure search results are retrieved quickly. The marginal anxiety here is that websites want to ensure users receive the most recent page version.
Aggregation sites, however, are not so well liked. News aggregators trawl to copy headlines, summarise and thumbnail photographs; price comparators and auction aggregators copy product information. Websites are concerned about aggregation because users bypass the home page and the prime advertising space. Concern also surrounds email and personal data harvesting and the consumption of bandwidth allocation. Ticket agencies, auction sites and news sites are the most vulnerable as by their nature they need to be updated regularly; in order to keep up, aggregation sites need to crawl excessively.
To avoid spiders Ticketmaster for example, and others use a word verification system, requiring the user to copy a code from a shaded text box. Many use the robots.txt protocol and others use several “techie” methods involving rewriting of the URL. But, there is a trade-off, most spider prevention mechanisms also inconvenience and frustrate the legitimate user. If a site is too difficult to access or there are too many hoops to jump through a user may look elsewhere.
The main auction and ticket sale sites appear to feel adequately protected and online retailers welcome the additional traffic or utilise success fee based licensing agreements.
Should the traditional news media sites, such as the BBC, The Times and the FT, be more concerned about news aggregation sites? Considering the successful cases brought in the US and Europe, why has there not been a case in the English courts since the 1990s against an aggregation site? The British media has traditionally enjoyed a strong collective and individual brand image. Perhaps they believe that the Internet is effectively self-regulated and that their readers go directly to their home pages without passing the news aggregators. The best known are NewsNow, Google News and Yahoo News.
Perhaps our press and broadcasters should be more concerned. Google, Yahoo and MSN all have their news aggregation sites only one click away from their search engines home pages and we all know how popular those are. Further, the brand image of these search engines and related news sites is significantly stronger than it was even two years ago and it surely won’t take long for them to present a major challenge, if they don’t already. The success of Craiglist, the online free classified pages, should serve as a warning: it has already diverted millions of dollars of advertising revenue away from the American news industry. Perhaps it will require Google or Yahoo to start selling advertising space on their news sites before the press and broadcasters get really worked up, but by then it might be too late.
Mobile technology is booming. With every development the opportunities for making money increase. It started with advertising via text messages and it was soon realised that competitions, giveaways and text for information services held the attention of the end user. Now with the opportunities of multimedia advertising, things can only get more interesting.
As with the Internet it was thought that subscription and pay-per-view services would be the way forward. But why would users pay for content or services they could get for free elsewhere? The industry is just screaming for an advertising based model, you just have to take a look at the potential:
- There is estimated to be 2 billion mobile phone users worldwide, twice as many as there are Internet users
- Mobile phones are personal devices, frequently left switched on 24/7
- They are taken and used everywhere from the office to the bedroom via every conceivable social situation
- There is huge opportunity for collecting and interpreting behavioural and personal data
There is much for the strategists to think about, from adverts on mobile Internet portals (check out the interactive Xbox ad on Orange’s mobile Internet portal) to advertising over mobile TV and not least, how not to wind up the end user in the process. However, the question remains; why would users pay for content or services they could get for free elsewhere? Sponsored content is a concept Blyk (a start-up) and Vodafone are looking to exploit by launching an advertising funded service later this year. Mobile line rental tariffs could be reduced in exchange for an agreement to receive advertising. Mobile Internet services, music videos, mobile TV or other content could be provided free in exchange for watching a short advertising clip first.
As with Internet advertising, to be effective, the mobile advertisement must be engaging, original and short. That, however, is for the creative agencies to worry about and they have had several years of practice with the Internet, although admittedly mobiles present a greater challenge because of screen size. The advantage to advertisers of sponsoring mobile services is that it enables them to collect personal data and target advertisements more particularly by behaviour, demographics and time of day.
We shouldn’t forget user-generated content. Given the success of MySpace and YouTube there will be moves to exploit the format in the mobile arena. It is highly unlikely that users will pay for the privilege so it will be the advertisers paying a premium to access the new mobile Internet community.
The best business models are still being sought and over the next few years there will be, no doubt, much experimentation. But, you never know, the future may well be low cost (initially) mobile telephone and Internet services (paid for by advertisers) in exchange for providing personal data and receiving multimedia advertising: much like its fixed line older brother.
USER GENERATED GOLDMINE
The sale of MySpace bagged its owners US$580m (£311m) and Google paid a whopping US$1.65 billion (£880m) for YouTube. Not bad considering that the content of both sites is generated by users and not the sites themselves. So why have these sites commanded such huge price tags? It is the scope and volume of content, combined with ease of access and the sizeable worldwide audience attracted to the medium.
However, there are legal implications of “publishing” content to an indeterminable audience. The target status of these sites has grown exponentially as prospective claimants (such as music and film companies) now have the comfort of knowing that the pockets they are seeking to “raid” are those of multi-billion dollar behemoths.
Sites will try to limit potential exposure by inserting warranties and indemnity clauses into their terms and conditions thereby passing the risk of proceedings on to the content up-loaders.
This does, however, seem wildly imbalanced against the content owner who assumes, often unknowingly, a high degree of risk and is obliged to grant the site a worldwide, royalty free licence to use the content. Paris Hilton’s creatively titled sex tape, “One Night in Paris”, received over 400m views and although it did not fill her pockets directly, YouTube effectively act as her own free advertising channel. But spare a thought for “Star Wars Kid” (a.k.a. Ghyslain Raza) who, despite having received over 900m views of his lightsabre skill showcase, has not received a bean.
In reality the terms and conditions are merely cosmetic. If actionable content is published on an ISP’s server, the ISP is liable. Even worse, if the ISP is aware that it is hosting actionable content, well, let’s just say it’s in big trouble. Despite the sophisticated indemnities in the ISP’s favour, the likelihood of enforcement against an “uploader” in China for example, are at best very slim.
Due to the volume of content posted it would never be cost effective or practical for content to be pre-moderated and such a requirement almost certainly would not make the site worth running. Therefore, sites usually adopt a “notice and take down” policy removing content if and when complaints are received. If they do not moderate their site (and therefore have no notice of the content) they have valid defences for defamation and other claims.
Despite the rumoured multi-million pound legal fighting funds and YouTube’s proposed scheme to share its advertising revenue with the content providers announced in January, the proceeds from user generated content continues to float straight into corporate balance sheets and for now anyway these user generated sites are the clear “freeloaders”.
BROADCASTING BATTLEGROUND
Ask any broadcaster - television and radio programmes are heavily regulated.
Ask any advertiser - adverts and marketing promotions are similarly heavily regulated.
Ask any broadcaster or advertiser who has been on the receiving end of an Ofcom intervention and “heavily regulated” rapidly becomes “very heavily and expensively regulated”.
Ask any web based company - regulation is a very long way down any priority list.
Web users can stream or download most broadcasters’ output. With ever greater bandwidth, the distinction from a viewer’s perspective between broadcast delivery and web delivery is likely to become increasingly blurred. A broadcaster’s perspective is starkly different: one form of delivery is heavily regulated and one is not.
The EU’s approach (to be enshrined in an upcoming Directive) attempts to make web based programming subject to the same standards as broadcast programming. This approach is (highly) unlikely to succeed as the nature of the web will make it almost impossible to impose broadcast-standard programme regulation. It is likely that this forthcoming Directive, together with an ever growing list of European Directives, will be subjected to the “Italian treatment” - there only for guidance rather than strict interpretation.
Ofcom is taking a more pragmatic line and its current approach is to try to draw a distinction between content that a viewer/consumer requests (i.e. as a web page) and content that a viewer/consumer receives (i.e. as a broadcast). This distinction is marginal - there’s little substantive difference between listening to Today on FM and listening to it as a podcast later in the day (the distinction that some programmes are broadcast live is not always applicable).
Although inevitably with a time lag, it is expected that Ofcom will adopt a flexible approach which will track the technology. The issue will go live when a new channel sets up purely from an Internet platform based outside of the EU. Ofcom is highly aware that an overly zealous regulatory regime will force protagonists to set up or re-register overseas and that a mass exodus from the UK will effect the Treasury’s tax revenues.
In the medium term the only way for the regulatory burden to go is down, although expect a few EU-originated blips (like the upcoming Commercial Practices Directive) along the way.
SOUNDS PLUNDERPHONIC
Copyright subsists in any forms for the record industry but there is a particular anomaly between the rights that exist in the sound recording of a work and those in the musical composition itself.
The copyright in a sound recording is owned by the producer of the recording (usually the record company) for 50 years after release: after which they lose their exclusive rights to sell and distribute the recording. The author of the musical composition is protected by copyright for his/her lifetime plus 70 years during which time he/she receives broadcasting and performance royalties.
Artists (and their estates) who did not write the lyrics or the music for their recordings lose all royalty payments in respect of their recordings. The Presley Estate and Cliff Richard will no longer receive any benefit from their recordings 50 years after the original release (i.e. now in respect of some records). In contrast Mick Jagger and Keith Richards (and their respective estates) will continue, despite the ending of the sound recording protection, to receive royalty payments because they wrote their songs.
So what effect will a lapse in copyright of the recordings of an artist have in practice? Essentially any person will be able to re-issue the work in any format and they will not have to account to the record company or the artist (unless the artist also penned the songs). The future may hold low priced complete back catalogues; white cover bargain basement priced albums; special editions enhanced by song lyrics, new artwork, photographs, interviews and DVD clips. Mash-up turntablists and plunderphonic gurus will be sampling liberally, giving new life and exposure to “old” works (the new regulations giving moral rights to performers do not apply retrospectively, therefore, Sir Cliff will be in no position to object to ingenious mixings of Summer Holiday); top quality shareable file formats will be freely available on file sharing sites, allowing new generations easy access to the Greats. When will this consumer-friendly future become a reality? For Frank, Ella, Elvis and Cliff “the time has come”, for some of their recordings already; other recordings will lose protection over the next couple of years. Sinatra’s “Songs for Swinging Lovers” was released from copyright protection at the end of 2006.
For the Beatles, Beach Boys, Bowie and the Stones it will become a reality within the next ten years. The Beatles’ “Please Please Me” will be released from copyright in 2013 and “Revolver” only three years later.
It is clear that savvy entrepreneurial record companies, artists and consumers will all benefit from the major labels’ losses. However, the big boys boasting original artwork and extras, with a little re-mastering and creative merchandising will be able to continue to turn a profit. The majors can compete on presentation but the insurgents will be competing on price.
THE END OF FAIR PLAY?
In the UK, unlike in the USA or most of Europe, if you purchase a CD and copy it onto your iPod, you are breaking the law. We have no right to make private copies of copyright works.
A large chunk of the population doesn’t know that this is illegal, or frankly doesn’t care and does it anyway. Time to change the law? The Government, prompted by the Gowers Review of Intellectual Property has announced that they will introduce a private copying right by 2008.
However, even once the law is changed, consumers will still have to wrestle with Digital Rights Management (“DRM”) software which protects most legitimate commercial content distributed electrically, DRM is very clever stuff, it allows the rights holder to prevent copying entirely, allow a limited number of copies, or specify any number of other parameters. However, the consumer experience of DRM is not always a happy one. Sometimes it doesn’t work as it should and perhaps more frustratingly, it doesn’t always work as consumers think it should.
A root cause of these problems is the different, incompatible, software used by content providers. For example, Microsoft has “Windows Media Rights Manager” and Apple has its “Fairplay” system. So, if you owned last year’s Apple iPod and fancy changing to this year’s Microsoft Zune, your expensive collection of music downloaded from Apple’s iTunes Store will be unplayable on your new device.
Apple has received a torrent of criticism for not making Fairplay protected content accessible on devices from other manufacturers. But a lack of interoperability is only part of the problem with DRM. It is unlawful to “circumvent copy protection measures” so removing the DRM to make a copy of a work is illegal, even though there are times when copyright law permits a copy to be made (eg for the purposes of “criticism and review”). Also, there are privacy concerns. DRM can be used to gather all sorts of data but this harvesting is not always fully explained to consumers.
The industry has had its problems with DRM as well. In August 2006, BSkyB suspended downloads of movies and sports from its broadband service when Windows Media Rights Management was found to have been hacked.
Given the problems with DRM, rights holders have begun to question if it’s really the best solution. Indeed, some have come to the conclusion that stricter terms of use and stronger protection don’t always, if ever, add up to better sales. However, the need to ensure stable revenue streams in the rapid take up of IPTV, VOD services and other new media exploitation , means that DRM of some kind will be embracing many of our files for some time to come.
THE BIG BLIND
In 2005 the Government passed the revolutionary Gambling Act. The Act, once it is fully in force, will make remote gambling (by Internet, mobiles etc) legal in the UK. A new dawn was heralded. Off-shore gaming companies floated their businesses on UK markets and shares in dice manufacturers shot up in value (probably).
But in 2006, the USA decided that it didn’t much care for Internet betting and arrested several prominent figures from UK AIM listed gambling companies. The US Government Act of 2006 making it an offence to use the Internet to transmit funds for unlawful gambling.
One UK listed gaming company, its business in tatters, sold off its US facing operation for $1. And suddenly, gambling was less fun.
After the US response some expected the Government to gently sweep The Gambling Act under the carpet, stare at the floor and mutter incomprehensively whenever the subject is mentioned. However, fore the Stateside shenanigans the Government created the shiny new Gambling Commission for the regulation of betting and remote gambling. And change is afoot.
Our old betting, gaming and lottery legislation (mostly dating from the 1960s) is set to be finally repealed in September 2007. Not only will it then be possible to obtain a licence for the provision of remote gambling (which includes gaming and betting) but long established laws regarding sales promotions, prize competitions and lotteries will also be abolished.
There may be some teething troubles as the new regime beds down, but in the medium term it should bring some welcome certainty. Now, for the first time, gambling related contracts will be enforceable at law and cheating will be a specific offence.
Further, nowhere in the plethora of old (current) gambling legislation was there a definition of “gambling” or of “lottery”. The old rules caused confusion, uncertainty and some very odd results. Look at the ludicrous position of Spot the Ball competition. Under the old law prize competitions are illegal if they depend on the prediction of past events where the outcome is not generally known - such as the position of the ball at any moment in time. Spot the Ball is currently legal because the aim of the competition is not to determine where the ball actually was (a past event), but where the judges determine it should be!
Hopefully, once the Act is fully in force, the conduct of gambling and sales promotions/competitions may not be such, erm, a gamble.
SHRED OR SPREAD
Document storage and retention is hardly the most exciting topic. Sounds far too much like compliance. However, akin to most compliance issues, organisations need a policy: preferably one which is straightforward, transparent and effectively communicated.
When it comes down to it there isn’t much that most companies legally need to keep. Tax returns is about it, although the burden for financial services organisations is more onerous. Currently, there is a wide scope of policies that an organisation could adopt:
- at one end of the spectrum there is the “mid 1990s investment banking policy”; shred or burn everything which is more than 6 months old. However, given the problems that landed at Mr Quattrone’s door this sort of policy is a lot less popular now than it was 10 years ago; and
- at the other end, lies the default position; keep everything indefinitely, all emails are archived and all documents retained and stored. The costs of storage and retrieval make this the expensive option
As ever, taking the middle path makes sense, placing particular emphasis on material location and access when needed.
A sensible route would include:
- a policy, write it down and disseminate it widely
- storage of all emails for a period of 3 years (and no more than 6 years)
- retention of tax returns, annual returns, employee records and company accounts
- organisation of accessibility both in terms of location and retrieval of documents so as to avoid mass panic; and
- arrangements to ensure that any document destruction can be halted when litigation is looming (otherwise Enron-esq problems arise)
Lastly, this sort of policy would work well in the UK and possibly the US but it needs localising even (or more particularly) within the EU.
RECENT (SUCCESSFUL) THINGS WE’VE BEEN UP TO
Mohammed Jameel -v- The Wall Street Journal Europe
FSI acted for the Wall Street Journal who won a landmark decision from the House of Lords. The public interest defence in Reynolds was re-affirmed and developed to provide a defence for defamation contained in important news stories, where it is difficult or impossible to get on-the-record pre-publication clearance.
Harrods -v- Times Newspapers
FSI acted for Times Newspapers in defending a breach of confidence action, brought instead of a defamation claim, in respect of the publication of some allegedly confidential memos. The claimant ended up abandoning the claim.
Monsoon Accessorize -v- Primark, Matalan, New Loom, Peacocks and Asda
FSI acted for Monsoon Accessorize in bringing claims in copyright, design right and criminal enforcement against other high street stores. Monsoon Accessorize succeeded in having offending items removed from shelves and received substantial damages.
Tasmanian Aboriginal Centre & Michael Mansell -v- Natural History Museum
FSI is acting for the Tasmanian Aboriginal Centre in a Judicial Review of the decision by the Natural History Museum to conduct scientific tests on 17 sets of Aboriginal remains. The case raises Human Rights and ethical issues and is a test case for the repatriation of human remains.
You may have noticed that none of the above involve convergent media …. bit it certainly helps to know how traditional media and brands work.
We have recently conducted work for the following clients: Washington Post, The Times, New York Times, Express Newspapers, Turner Broadcasting, Bloomberg, CNN, Paramount, National Geographic, The Business Bankside Films, Arcadia Books, Macmillan Publishing, Lionsgate Entertainment.