Canada is the World’s “Bad Boy”

What did Canada do?  They were first-class hosts to Olympians and tourists from all over the world, they have delightful accents whether they’re from Quebec or Nova Scotia, and they make some good maple syrup.  So why are they referred to as the “Bad Boy” of the world by the International Federation of the Phonographic Industry (IFPI)?  As you might guess, it is because of rampant music piracy.  But what sets Canada apart from the rest of the world, where music piracy also runs rampant?

Canada isn’t alone; Spain was also singled out as being particularly bad boy-ish in regards to piracy.  The yearly Recording Industry in Numbers reveal that global music revenue decreased by seven percent, but in many markets, notably the United Kingdom, they actually saw modest increases.  According to the IFPI,  “no fewer than 13 countries saw music sales growth.” Canada, however, saw a 7.4 percent decrease, while Spain’s revenue dropped by 14.3 percent.  The IFPI says that these two countries have the “world’s weakest legal defenses against piracy.”  The IFPI further blames Canada, saying, “Canada, practically the only government of a developed country not to have implemented international copyright treaties agreed over a decade ago, is a major source of the world’s piracy problem.  A disproportionate number of illegal sites are hosted on Canadian soil.”

The IFPI credits strong legal measures, such as Britain’s Digital Economy Bill, as the reason why music revenue has grown in certain countries while it has fallen so dramatically in others.  But not everyone agrees with the IFPI’s reading of the numbers.  According to TechDirt:

Of course, what the IFPI totally ignores (not surprisingly, since they only represent record labels) is that while the sales of music directly may have declined in some markets, the overall market for music grew tremendously. In other words, the decline in sales of recorded music has not done harm to the music industry, but just to a few record labels. This new report is really just an attempt to pretend (yet again) that the “music industry” is really “the recording industry.” And, of course, what this report doesn’t come close to acknowledging, is that in putting in place these “legal environments” in places like Sweden and South Korea, it has cut off many more efficient and effective ways for musicians to create, promote and distribute their works.

That’s what this report really shows. It shows that the IFPI wants to be the gatekeeper to make sure that more of the money going through the music ecosystem goes to its labels, rather than to others. It doesn’t care if the overall market for music is smaller, just as long as more of the money goes to its members.

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More on the iPhone Prototype Debacle

While many in the non-technology world didn’t think the lost and found iPhone prototype was big news, there is no denying it keeps getting stranger.  John Stewart is now involved, and the word “Appholes” was used.  What’s going on in this ongoing saga?  And who cares?

Steve Jobs apparently wields great power over not only his hapless employees but also California police.  Last week, Gizmodo editor, Jason Chen, made public that his blog has bought an iPhone prototype for $5000.  This brought on conspiracy theories and endless jokes about the engineer who left the phone in a bar.  Chen said a “source” had found the phone and then offered it for sale.  On Friday, April 23, police raided Chen’s apartment and seized his computers, hoping to find that source.  The Rapid Enforcement Allied Computer Team sprang into action with a warrant to remove computers and servers from Chen’s home, which also doubled as his workplace.  Chen says he returned from dinner at a quarter to ten on April 23 to find the police searching his garage and home; they told him that they had already been there for several hours.

After confiscating four computers and two servers, along with phones, cameras, and financial records, the police left.  Gawker Media COO, Gaby Darbyshire, responded to the raid with a letter to San Mateo police:

Jason is a journalist who works full time for our company…He works from home, which is his de facto newsroom, and all equipment used by him there is used for the purposes of his employment with us.”

They are arguing that under California law, Jason Chen is protected from having to tell authorities the identity of his source or otherwise share material that is related to his job as a journalist.  This would make the warrant invalid.  Darbyshire also noted that a night search was not authorized by the warrant, and because Chen returned home at 9:45 pm, the search was also invalidated on that account.

It is rumored that Gizmodo is considering suing the police.  But it has also raised the question of whether bloggers, such as Mr. Chen, are journalists.  Many in the journalism field say of course, and that Chen’s first amendment rights were trampled over.  Others disagree, saying Chen should not enjoy the protection afforded to “real” journalists.  Blogger Randall C. Kennedy writes,

“B loggers are not journalists.  Real journalists have ethics.  They check their facts and follow well established rules of conduct: Don’t fabricate; don’t obfuscate; don’t steal. Most high-profile bloggers, by contrast, follow a looser, ‘shoot first and ask questions later’ philosophy. It’s all about beating the other guy to the punch by being the first to break that big scoop.”

John Stewart had this to say about the debacle:

“I know that it is slightly agitating that a blog dedicated to technology published all that stuff about your new phone. And you didn’t order the police to bust down the doors, right? I’d be pissed too. But you didn’t have to go all Minority Report on his ass! I mean, if you wanna break down someone’s door, why don’t you start with AT&T, for God sakes…Come on, Steve. Chill out with the paranoid corporate genius stuff. Don’t go all Howard Hughes on us.”

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Is a US Version of the Digital Economy Bill on the Horizon?

Piracy costs the music industry billions of dollars per year; the UK has been attempting to combat the problem with the newly adopted Digital Economy Bill, and a judge in Ireland just cleared the way for an Irish version of the anti-piracy act.  Both of these are designed the concept of graduated response, and music companies and rights holders are asking Congress to consider a similar bill in the United States.

A group of music publishers and rights holders, including the National Music Publishers Assn., ASCAP, BMI, and SESAC, asked the Federal Communication Commission to consider allowing them to work with ISPs in order to develop a graduated response to end online piracy.  The widespread problem has the following results:

  • $12.5 billion in economic losses overall
  • 71,060 lost jobs and $2.7 billion in lost wages
  • Loss of $422 million in tax revenue
  • 32 percent reduction in songwriter mechanical royalty income between 2003 and 2006

According to the International Federation of the Phonographic Industry (IFPI) estimates that some 95 percent of music downloads in 2008, which equals about 40 billion downloads, were unlawfully gained.  When the judge in Ireland allowed music rights organizations and ISPs to develop graduate responses to piracy, he wrote in his decision that just because the music being stolen was on the internet, it wasn’t any less illegal to take.  A comment delivered by the music rights groups to the FCC echoed that sentiment:

“[T]he FCC draws and important and necessary conceptual distinction between lawful and unlawful content, appearing to recognize that the net neutrality should not somehow facilitate the transfer of illegal content.”  They go on to argue that “ISPs must have the ability to establish not only a system of warnings but also a penalty regime for violators in order to ensure that a reasonable deterrent to unlawful activity exists…Final rules on net neutrality must ensure that ISPs have the flexibility to employ the best available technologies and methods to combat the illegal transmission and distribution of copyrighted works in the future.

Without the graduated response, they say, digital piracy will only increase in scope and “diminish the quality of content on the internet for the vast majority of users.”

The graduated response they would prefer the ISPs be able to follow was not mentioned specifically, but according to the UK’s Digital Economy Bill, ISPs must send out letters to those who illegally download copyrighted material, and if repeated warnings go unheeded, their internet service may be terminated.  A similar plan seems likely in Ireland, and graduated responses plans are or will be implemented in New Zealand, France, and other countries around the world.

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Spotify Gets Even Better

Americans have been waiting for a US Spotify launch for months, and it always seems to be a few months in the future.  Recently, Spotify announced some changes to its platform that will make the rest of us a little more jealous until they can make it to the States.  Spotify is poised to take on the giant iTunes, and they’ve added a few networking capabilities that will offer users more freedom and versatility than the Apple platform.

Spotify has been touted as the best defense against music piracy, and in fact, because of the freedom and usability of Spotify and other such music sites, the UK saw the first increase in music sales in six years.  The message is give the people what they want in a reasonable and user-friendly way, and you’ll decrease piracy.  Most people would rather go the legal route if it was just as easy as downloading and sharing content illegally.

The new changes to Spotify’s platform involve making it more social, allowing users to network, share, and trade music in a more streamlined way. The new “Spotify Music Profile” is a customizable profile that allows for easier sharing with friends. Users will be able to connect to Facebook and add Spotify users to their friends list and access their iTunes library without opening another application.  The changes are set to take effect starting from 9:00am GMT today for both the Free and Premium platforms.  Spotify founder and CEO, Daniel Ek, says:

“Today Spotify has moved a step closer to making music more connected, and realizing our dream of becoming THE music platform.  We want to empower users to share and discover music in a way that hasn’t been possible up until now.  It’s never been easier to enjoy music together.”

Spotify’s business model has been criticized as being unsustainable: it has long been said in the US that free doesn’t work.  Mr. Ek and other believers think that this is the only model that will work to stem the tide of piracy and allow people to access music in a way that they actually want.  They don’t want to buy CDs. They do want to share music with friends and have a social network around their tunes.  They don’t want to buy an entire album, they want to pick and choose their songs.  Spotify allows this, and hopefully, they’ll be able to make it pay.

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Silver Lining for Gray Powell?

Last week, an engineer from Apple made headlines all over the world.  For losing a new gen iPhone.  In a bar.  Not only has he provided fodder for tech publications, he inspired a David Letterman Top Ten list, “Top Ten Excuses of the Guy Who Lost the iPhone Prototype.”  Among our favorites:  “I’m more of a Kindle kind of guy;” You mean besides being drunk out of my mind?” and “Distraught Kate Gosselin kicked off ‘Dancing with the Stars.’”  But there may be a silver lining for Gray Powell somewhere amidst the jokes.

Lufthansa Airlines apparently took pity on the Apple engineer, sending him a free flight to Munich and inviting him to visit Lufthansa’s new Bavarian Beer Garden Business Lounge because of his “passion for German beer and culture.” No word on if Apple’s going to frisk him before he leaves for his trip.  A letter from the airline to Powell reads:

“We all know how frustrating it can be to lose personal belongings.  Especially when it is such a unique item…We thought you could use a break soon – and therefore would like to offer you complimentary Business Class transportation to Munich, where you can literally pickup up where you left off.”

Before he had his epic drunken lapse and left this super-secret prototype at a bar, he updated his Facebook status to read: “I underestimated how good German beer is.”

Gray Powell had been able to avoid being named in the press until he was outed  by the Gawker blog network, who, in their defense, says, “now that his name has been made public, the company won’t be able to fire the emerging accidental celebrity without a significant PR backlash.”

Steve Wozniak, Apple co-founder, was showing his support (and mocking) of Gray Powell, wearing a t-shirt that read, “I went drinking with Gray Powell and all I got was this lousy iPhone prototype.  Wozniak wrote to CNET: “It’s a bad accident that could happen to any of us.”  Hopefully, the 27 year-old engineer has a long and uneventful (at least in a media circus type of way) career with Apple.  And hopefully he can take a joke.

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Two per Customer? Forever?

Has Apple limited customers to purchasing only two iPads?   It’s not news that Apple is currently limiting customers to two iPads.  Understandable as they are creating frenzy-quality demand among Apple fans.  But have they gone one step further and limited people for life? It seems absurd, but it is rumored that Apple is actually restricting customers to an undisclosed number of iPads for life.  Can they do that?  We’ll see in a few years, but they are trying.

Apparently, a medical student was trying to purchase iPads for people overseas.  There were plenty in stock at his local Apple store, and he’d been there before to pick up his two iPad limit.  According to his blog, Protocol Snow, he was told by Apple that he had reached his lifetime limit for iPads.  When he asked what the lifetime limit is, he was told by an Apple employee, “All I can say is that you have reached your lifetime of iPads and will not be allowed to buy any more.”  He writes:

When Apple delayed the international iPad launch by a month, early adopters worldwide started to panic. Since my nearby Apple store initially had plenty of stock, I offered to purchase and ship iPads internationally for members of the NeoGAF gaming forum. I was doing this as a favor, unlike hoarders who were unloading iPads on eBay to cash in on the $150+ markup. Instead, my asking prices were very reasonable, just enough to cover all the tax, international express shipping, and Paypal fees with a little left over for unexpected costs.

According to Daily Tech, it seems that this mysterious lifetime limit is being rather arbitrarily or at least vaguely enforced at Apple stores, not through other vendors, such as Best Buy.  There have been a handful of reports about customers being told they’d reached their limit, which may be an effort to reduce price gouging and huge markups for the new iPad.

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Ireland’s Piracy Fight

No country in the world is immune from the problem of music piracy, but it is interesting to see how different countries address the issue.  The US doesn’t let us have a good Spotify like they do in Europe; the UK badgers teenagers and old people; and China.  Well, we’re not sure what China does because ninety-five percent of music sold there is pirated.  Ireland is wading into the fray as well with a recent court ruling.

Last Thursday, the New York Times reports, Judge Peter Charleton ruled that the agreement forged between Ireland’s biggest internet service provider, Eircom, and the music industry is legal.  The deal struck by these two groups would allow the ISP to cut off the internet service of people who have been repeatedly warned to stop engaging in copyright violation and the unauthorized copying of music.  His honor wrote in his decision, “The Internet is only a means of communication.  It is not an amorphous extraterrestrial body with an entitlement to norms that run counter to the fundamental principles of human rights.  There is nothing in the criminal or civil law which legalizes that which is otherwise illegal simply because the transaction takes place over the Internet.”

While the Irish Data Protection Commissioner voiced concern that the move would violate the privacy of internet users, the International Federation of Phonographic Industry was heartened by Judge Charleton’s ruling.  “This sends a strong message to governments that are now considering how to help their creative industries address the threat of mass online piracy.”  And IFIP CEO John Kennedy said “This is a hugely important decision that sends a resounding message about the need for creators and artists’ rights to be protected on the internet. It confirms the key principle that intellectual property rights should be protected no differently online than they are in the physical world.”

The agreement in Ireland is very similar to a provision in the UK’s recently passed Digital Economy Bill, which would require ISPs to send out warning letters to those who violate copyright laws and cut off service to repeat offenders.

According to Willie Kavanagh, chairman of Irelands music industry group, IRMA, says, “The whole industry, including performers, composers and record labels, has been decimated by illegal peer-to-peer traffic and our losses amount to over €60m [over US $107 million].”

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Lesson to Apple: Don’t Let Your Engineers Drink

An item worth mentioning in today’s news is the list of the world’s most expensive items that Business Week compiled.  Topping the list is a $65,000 a night hotel in Geneva and a $24 million car – a Mercedes-Benz W196.  Rumor has it, though, that the Benz was hit hard by the down economy as well and was reportedly bought by a German industrialist for a paltry $12 million.  Our favorite, the iPhone, also made the list.  If anyone was complaining about the cost of an iPhone, iPod, or new iPad, check out this $2.97 million iPhone.  It’s not even one of Apple’s mythic 4G phones either.

The iPhone 3GS Supreme Rose is an absurd creation; someone didn’t know what to do with their diamonds, so Stuart Hughes (who also created a $2 million+ television) fashioned a 22-carot gold iPhone and laced it with some 53 diamonds for an “unnamed Australian businessman.”  If you paid £1.92 million for a cell phone, you’d want to be unnamed too.  Apparently, someone wanted to keep up with the Australian Jonses and ordered an 18-carot rose gold iPhone with hundreds of diamonds, the centerpiece of which is a 7.1-carot diamond that serves as the main navigation button.  Huh.  Apple usually has pretty low markups.

And speaking of overpriced iPhones…CNN is reporting that tech blog, Gizmodo, spent $5000 on a possible prototype of a future generation iPhone.    Senior Editor Jesus Diaz says, “Paying for an exclusive has always been done in the journalism world.  There are people who admit they do it and people who do not.  We have done it.”  But how did they do it?  Diaz says a Gizmodo employee got the phone from a “source.”  The source took it from a bar.

According to Diaz, an Apple “engineer was in a bar, celebrating his birthday.  He drank two drinks too many and forgot the phone.”  The poor guy probably had a hangover and the wrath of the Cupertino Beast crashing down upon him.  And he’ll always be known as the guy who left the prototype of the new 4G iPhone in a bar.  Apple reported the phone stolen before finding out that Gizmodo had it.  They sent the following letter:

“It has come to our attention that Gizmodo is currently in possession of a device that belongs to Apple,” says the short letter from Apple’s lawyer to the blog. “This letter constitutes a formal request that you return the device to Apple. Please let me know where to pick up the unit.”

Gizmodo’s editorial director, Brian Lam, writes, “Just so you know, we didn’t know this was stolen when we bought it.  Now that we definitely know it’s not some knockoff and it really is Apple’s, I’m happy to see it returned to its rightful owner.  PS. I hope you take it easy on the kid who lost it.  I don’t think he loves anything more than Apple except, well, beer.”  Wired picked up on the story and wrote, “At this point we’re pretty much certain it is this summer’s new model.  Some at Apple is in big trouble.”

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iPad Can’t Get Into College

Despite Apple wanting you to think otherwise, tablet computers are not new.  In fact, they’ve been around for a while, but their applications have been somewhat limited to specialized fields, including contracting, where people have to be in the field and need access to data.  But they are also very useful in educational settings.  Schools have been using them as e-readers long before Kindle was cool.  Ironically, school is where the iPad, the newest tablet computer, is running into trouble.

According to the Washington Post, both George Washington University and Princeton University have banned iPads.  If you’re thinking that it’s a “no cell phone in class” policy updated, that’s not quite the case.   It seems the iPad is a little too hot for the schools’ Wi-Fi systems to handle.  Princeton officials say that out of the 41 iPads on their campus, 22 caused DHCP client malfunctions, which affected other wireless devices around the college.  Cornell University experienced similar fallout after the iPhone was released, and IT director Steve Schuster says that Cornell is “working to ensure the iPad does not have devastating consequences to our network.”

The Wall Street Journal reports, “Such issues could be a blow to Apple, which has gone after the higher education market by highlighting the iPad’s portability and availability of e-books. But students may not be willing to pay $499–or more, depending on the type of iPad–if they still need a desktop or laptop computer to check course assignments or email. Some higher education insiders also worry there isn’t enough educational content available via the iBookstore application to eliminate expensive physical textbooks.”

The universities and others across the world don’t have enough bandwidth to meet the incredible demand.  Israel banned Apple’s new tablet completely and are confiscating them at their border crossings because the country cannot support the demand.  This may be a problem for students who bought iPads to use as electronic text books, but who may have to pony up the cash to buy the old paper editions instead.  That adds to their cost, as well as to the weight they’re carrying around.  The Washington Post suggests that students find out about their schools’ ability to handle iPads before they buy one.  The problem is being addressed – the world just wasn’t ready for the iPad quite yet.

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Are the Piracy Police Going to Get You?

Digital piracy has traditionally been seen as a God-given right at best and a victimless crime at worst.  Increased attention on the impact of piracy – including job losses and losses of revenue for artists and music companies (which is admittedly less sympathetic than the job losses of average people), has sought to change this.  Success has been mixed, but a rogue antivirus program is hoping to capitalize on the attention given to piracy by scaring computer users into thinking the feds are just seconds away from breaking down the door. That’s not as absurd as it may sound. Just ask Matthew Wyatt.

The Antipiracy Foundation Scanner is known as an extortion Trojan.  Here is the text of a message you might receive:

Windows has detected that you are using content that has been downloaded violating copyright of its respective owners.  Please read the following bulletin and try to solve the problem in one of the recommended ways.

Probably you’ve been using file-sharing clients, torrents, or downloaded the content straight from the website. In any of those cases, you have violated the copyright of the respective owners. In most countries, this type of activity is prosecuted and serious penalties are imposed.  Maximum penalties could be five years in prison and up to $250,000 in fines.

Uh-oh.  Put back that bootlegged copy of “Telephone” quickly.  This message links to a rouge website,, which explains to users that the ICPP is a law firm that works with copyright holders to ensure their intellectual property rights are not violated.  As part of their business model, they routinely scan computers for illegal material.  The ICPP doesn’t exist, nor can law firms scan your computer.  Even if they really want to.  While it does sound a little sketchy, the warning can be effective because it is very easy to take material illegally and even unintentionally.  If you download a copyrighted picture from a website, for instance, and put it as your background, you’ve technically broken the law.

The Antipiracy Foundation Scanner hopes to prompt a quick response from people who think, “Hey, maybe I did violate a copyright.  Wow I’d better pay $400 to this law firm immediately to avoid a costly trial!”  It must have worked at least a few times with those honest, law-abiding people, but for the vast majority, the dire warning message is a roadblock on their way to a website.  It does have the effect, though, of setting back the antipiracy campaign because people are more apt to think it’s a joke, a farce, and not worth their time to consider.  Real piracy is a crime, but so is this Trojan.

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