Rupert Murdoch, after a short time of seemed like he understood the internet was a new and exciting tool, has since changed his medication and now sees it as the evil of all evils. He has been pushing, vocally, not through action, reinstating paywalls on his various media properties. The Wall Street Journal is one of the last major newspapers to have a paywall around most of its content.

Now Murdoch is claiming he will block Google from indexing the WSJ and his other media properties. Murdoch told Sky News Australia “If they’re just search people… They don’t suddenly become loyal readers.” He explained that traffic from search engines involve no loyalty – just view a few headlines and leave.

Removing a site from Google takes just a few lines of code in a robot.txt file, something Google and other search engines make no attempt to hide. So why is Murdoch waiting?

Maybe because even without loyalty, Murdoch knows traffic will drop significantly without search engines bringing tons of free traffic. Even if 99 percent of those people never return, there are 1 percent that stay and might return. It’s up to Murdoch and his websites to give these users a reason to stay and then find ways to monetize that traffic. Murdoch has previously said no news websites or blogs are making serious money, ignoring the massive enterprises behind Gawker, Huffington Post, PerezHilton, TechCrunch and hundreds of others who have embraced the internet to find more cost-effective ways to engage audiences and produce compelling content.

Techdirt points out that for all Murdoch’s grandstanding, his own websites have aggregators that link to other people’s content the same way he claims others are stealing his content. When others aggregate content it’s stealing. When Murdoch does it, its convenient? Maybe this will stop his crusade to overturn fair use in the courts since he’d be culpable too.

Not content to learn from the 10 plus years of mistakes by the recording industry, the movie industry is stampeding its way to obsolescence.

First, Fox and Warner Bros. have joined Universal in its battle with Redbox, the successful rental kiosks found outside supermarkets and fast food joints. Redbox rents movies for $1 a day, legally purchasing the movies from wholesalers. Redbox will even sell used DVDs for about $7.

Fox, Warner Bros. and Universal have sued claiming Redbox is infringing on their copyrights and are ordering wholesalers to refuse to sell their movies to Redbox before several weeks. The studios are demanding revenue sharing from the kiosks.

Redbox is countersuing for antitrust and abuse of their copyrights.

Redbox, while relying on the movie studios, is in a stronger position. Sony and Lions Gate are backing the kiosks with their movies, recognizing that movie fans love the price and convenience. DVD sales are down 13 percent while rentals are up 8 percent.

Next, the movie studios recently won two important court cases, both likely to cause more damage to the industry rather than help.  The first was the studio’s win over Real’s DVD copying software.  This copier circumvented the DVD’s DRM, which is illegal under the DMCA, but then put new DRM in its place so users couldn’t share their movies.

Now, copying for personal use or backup is considered legal and a fair use of a copyrighted work. But because of the DMCA’s anti-circumvention laws, you can’t backup the DVD you legally purchased.

What’s silly, is Real’s copier cost $20 and used DRM making it a somewhat worthless copier, especially when there are dozens of free DVD copiers without any DRM. So by suing, the movie studios 1) promoted that people could copy movies and 2) sent them to free, DRM-less alternatives.

For their other lawsuit, movie studios won their appeal against Kaleidescape, which is basically an iPod for movies (or a DVD jukebox, if you will), but costs $10,000.  Movie studios of course feared this system would be a haven for piracy, but again, it’s $10,000. It’s for high-end movie fans with lots of DVDs who don’t want to keep switching discs. They backup their discs on Kaleidescape and then watch them on their TV. But because of the DMCA’s anti-circumvention laws, users can’t do what they are otherwise legally allowed to do. And the movie industry gets to stamp out innovation and technology that is trying to help make DVDs and movies more valuable.

How are legal remedies helping here? The movie studios are trying to crush three different companies who are trying to help make DVDs more valuable at a time when consumers are showing DVDs are less worth purchasing.

One (of the many) points of contention with copyright law is how much it limits fan-created works.  Last week I wrote about a fan-made sequel to the classic video game Chrono Trigger that publisher Square-Enix forced to stop (only a few weeks before release). This fan-made sequel would never have replaced an official sequel. It was a labor of love from fans eager to promote their love to other people.  Cory Doctorow points out, under copyright law, you’re allowed to criticize a work but not praise it.

Under fair use, I can criticize any copyrighted work. I can use clips or excerpts from it to support my criticism. But if I want to promote or praise the work, it’s considered a derivative work, and I have to get permission the copyright holder.

But as my IP classmates say: “Without copyright law, no one will make Transformers.” And “No good has come from remix culture.” These are the future of IP law.

This is where fan creation gets pushed aside. It’s not only the content providers that over value their content. Consumers also give commercial content a higher value than fan or user-generated content, often recognizing professionals do it better (whatever it is). But this assumption under-values the real benefit of fan content.

Video games are the best example of this. Many games have whole-heartedly embraced fan content, providing free tools for fans to create their own levels and add-ons to games.  Fans help extend the longevity of the game with their own creations, extending the shelf life and value of the game for users. Even with tons of free content, game developers will release their own add-ons and fans will pay for them (sometimes even releasing fan content as official content).  These game developers are not scared of the competition – they know the professionally made content will have a larger, more captivated audience because of the fan content.  Other media are slow to realize how beneficial fan made content is for the lifespan of a project.

Fan content doesn’t compete with official content – it’ enhances it (I say official content because fan content can be commercial).  Only devoted fans of the Lord or the Rings would take time to make “Hunt for Gollum.” And only fans of the franchise will go out of their way to see it. Any non-fans who see it will quickly recognize it is not an official production and if they like it, they’ll find the official versions. And if they don’t like it, no harm done (increased expose nevertheless helps).

And to say no value comes from fan or remix content? Let’s understand what that is: All those Disney movies from Snow White to Cinderella to the Lion King are based on fairy tales, Shakespeare, and other already written stories, remixed by fans to tell new, exciting tales. West Side Story is no less entertain for remaking Romeo and Juliet and yet Romeo and Juliet remains popular to perform. Movie versions of books and plays often increase the popularity of the original work. Letting fans create labors of love cost the content creators nothing, but gives them every opportunity to gain. Let fans be fans.

I keep looking for other things to write about, but the newspaper industry just keeps giving me great posts to write.  Let’s first look at this Washington Post article that pretty much argues for ending all the useful innovations of the internet to save newspapers.  It’s written by two former newspaper lawyers, but the Washington Post wouldn’t be swayed by that kind of conflict of interest.

Michael Masnick does an already perfect job of dismantling the outrageous arguments in the article. To summarize, the authors, Bruce W. Sanford and Bruce D. Brown, seem to be calling for an end to search engines and fair use while expanding copyright law to cover “hot news” and allowing newspapers to violate antitrust laws (while still offering them tax breaks).

But all this talk of saving newspapers still ignores why newspapers are more important than news. Newspapers are not the only source of journalism and any legislative attempts to save them only support an obsolete business model. Masnick cites from Dale Harrison’s comments on the Post article.

A lesson worth remembering is at the turn of the 20th century people had a transportation problem…and the solution turned out not to be a “faster horse”…but a Ford.

And one should note that the Ford didn’t arise out of the “Horse Industry Revitalization Act”.

I think the future of the media business will look as different as Ford and Toyota’s operations look from horse traders and blacksmiths.

Imagine what the passage of such ill-conceived legislation would have done to the car industry a century ago.

Harrison goes on to show that newspapers, for decades, had a monopoly on distribution. This lead to inflated advertising prices and likewise inflated budgets (much of the reason newspapers are in trouble now is the massive amount of debt they acquired during the bubble 90s). This monopoly distribution is dismantled with the internet, forcing advertising prices down to real market values and giving customers almost infinite choices for their content consumption.  Because of this basic economic fact, newspapers cannot sustain the business model they’ve been using for the past century.  It’s time to evolve.

But we’re scared if we lose newspapers, we lose journalism because none of these bloggers or aggregators create content.  If that so, then why is Maureen Dowd getting accused of plagiarizing a blogger? I’ve already criticized Dowd’s incredible misunderstanding of the internet and newspaper economics as well as her accusations of copyright infringement at Google (even though Google only links to content).  I actually have no problem with Dowd copying the blogger (she can copy me anytime) – plagiarism can actually be a good thing sometimes – but Dowd’s hypocrisy shows that 1) newspaper journalists are not perfect and 2) some bloggers can apparently write really well.

Also, let’s note that bloggers exposed Dowd’s plagiarism and pressured her to update her column online (and a correction in the Times).

Thankfully, not every newspaper wants to remain in the 1980s. John Naughton writes for the Guardian saying capitalism will eventually kill off newspapers that can’t evolve, leaving the market winners to better understand how to run a news business (not just paper) in the 21st century.

The problem at the moment is that the web is awash with free content, and in a competitive market the price always converges on the marginal cost – which is currently zero. But as providers disappear (or, like Murdoch, decide to charge), the supply of free news will diminish and something more like a normal market will emerge. Only then will we find out what people are willing to pay for news.

That takes care of the economics. But what will journalism be like in the perfectly competitive online world? One clue is provided by the novelist William Gibson’s celebrated maxim that “the future is already here; it’s just not evenly distributed”. In a recent lecture, the writer Steven Johnson took Gibson’s insight to heart and argued that if we want to know what the networked journalism of the future might be like, we should look now at how the reporting of technology has evolved over the past few decades.

The future is now. See if you can catch up.

After years of watching blogs and online news sites grow and prosper, you’d hope the news industry would see the potential and not the end.  Unfortunately, all the posturing of the past few years is exploding as the Associated Press and some news leaders are basically declaring war on the internet.

I haven’t been a fan of the Associated Press, who for a news organization, has surprising distain for fair use (except when it suits AP). This week, the non-profit organization announced it will police the web for anyone pirating news content. This is not limited to copying full articles, but anyone partial copies or even sentences and headlines, targeting aggregators like Google News, Digg, and many others.  As part of a coordinated assault, News Corp. owner Rupert Murdoch put it succinctly: “Should we be allowing Google to steal all our copyrights? Thanks, but no thanks.”

But Google and aggregators are not stealing your copyrights. It’s called free publicity. Just because someone else benefits by publicizing you isn’t bad or stealing.  It’s the way the internet works.

The other ironic part of AP’s strategy is to make sure search engines post “the original source or the most authoritative source” first in it’s results. Of course, AP wants to do this by pressuring Google rather than building good SEO websites and encouraging linking to their articles (since Google ranks authority, partly, by how many incoming links you have). So aggregators and linking is bad, but special treatment from search engines, like a special section prioritizing news outlets is okay. And sounds a lot like Google News. Techmeme editor-in-chief Robert Thomson points out the Wall Street Journal and New York Times make use of aggregators themselves, linking to other outlet’s content.  The New York Times was even sued over its linking practices.

Google Chairman and CEO Eric Schmidt spoke to newspaper publishers, urging them to think about the consumers, saying “if you piss off enough of them you will not have any more.” His point is newspapers need to address the needs of consumers, not fight against the way the market is evolving. Aggregators and link sharing is how the internet works – and both make content easier to find and more valuable to the person finding it.  Newspapers spent years hiding behind pay walls and found that didn’t work (though it seems it won’t stop them from trying again).

Also part of the news industry’s problem is an attachment to the medium paper.  As Michael Masnick writes: “It’s like saying ‘how to reinvent the horse-drawn carriage’ rather than ‘how do we improve transportation’”.  Charlotte Hall, an editor from the Orlando Sentinel, says:

It stops the clock once a day and takes an assessment, offering the kind of in-depth and analytical work that the 24/7 breaking news world on the Web cannot provide. Print is good at the things the Web is not good at–watchdog, explanatory, enterprise, narrative storytelling.

But Masnick notes that nothing Hall says print is good at can’t be done on the web. Newspapers are trying to convince people that if newspapers all go out of business, there will no news. All those television networks seem to be absent in this dialogue. But this is not the case.  Newspapers can be replaced by news websites.  Websites do some things better; paper does some things better, but neither matters when consumers are more and more choosing to get their news on websites.  The customer is always right, unless, it seems, it destroys your century old business model.

I don’t think paper will completely disappear. Some people still like the tangible product, so there is a market to sell to.  But overall the market is demanding evolution, and if the current players do not want to fill the market demand, someone else will.

Last week Google announced a $125 million settlement with book publishers to allow the search engine to copy out of print books and make snippets available with options to buy. The settlement avoids a lawsuit brought by the Author’s Guild and Association of American Publishers.

While many are praising the decision, I’m hesitant for several reasons. While it’s excellent to make thousands of out-of-print books available for research, the many restrictions, cost questions, and lack of legal precedent make this a lost opportunity for so much more.

Harvard University criticized the program for these reasons, going to far as to back out of the deal already in place before the settlement.  The university pointed out libraries, who would pay an unspecified price for full access, would be restricted to one terminal with access to the books and many copies would be missing pictures. Downloading would still not be allowed.

Second, Michael Masnick points out Google had previously stated it wanted these lawsuits to make better laws, using its massive war chest to fight lawsuits others couldn’t afford to. By paying off book publishers, Google not only lets go of an opportunity to stand up for fair use, but also opens itself up to other companies looking for an easy pay off. Viacom, in the middle of a $1 billion lawsuit with Google, used this settlement to claim Google learn its lesson in relation to honoring copyrights. Google’s made similar concessions, like paying off the Associated Press just to link to its stories, leading other news organizations to want their cut.

I’ve already found the limitations of Google Book Search reasons not to use it. Google is certainly trying to make the search mroe valuable for users, using an opt-out program to make sure orphan works can be accessed so this is better than nothing. But once again, book publishers are ignoring the value Google is adding to their books, books that are out-of-print and wouldn’t find an audience without Google’s scanning and searching.  Google is adding value publishers should want and be seeking out. But because of these restrictions (and cost), fewer people will be able to find these books and thus fewer people will be likely to pay.

YouTube has rejected Senator John McCain’s request for the video website  to consider fair use when responding to DMCA takedown requests.

McCain posted campaign ads with clips from CBS and Fox news broadcasts. The two networks sent YouTube takedown notices, which according to the DMCA, they are legally obliged to respond to immediately in order to maintain safe harbor protections.  McCain voted for the DMCA in 1998 and now has to deal with the consequences.

This shows McCain and few in Congress truly understood the effects of the DMCA and likely the same can be said for most complex laws put on their desks.  The DMCA includes the excellent safe harbor provision that protects platforms from being liable for what users do (like YouTube shouldn’t be liable for copyright infringement of its users).  But the takedown notices have become an abused system stifling free expression and negative opinions. This is not to mention how anti-circumvention laws violate upheld fair use rights and stifle innovation.

When first passed, Congress probably thought they were protecting intellectual property. Their intentions might even have been noble. But these under-thought, one-sided laws are going to hurt innovation and creativity. And you could argue it’s hurting democracy. McCain can’t even get his own campaign ads on YouTube because the site is too scared of being sued over copyright infringement (too late).

Too often laws are passed to pander “look what I did” rather than look what we accomplished.  Did the admittedly rushed Patriot Act (which many politicians never finished reading) compromise our rights too much to keep us safe? How much is the new PRO-IP law’s Copyright Czar going to stop piracy? And when is this bailout bill going to turn my 401k into 401 million?

McCain shouldn’t be looking for special treatment from YouTube.  He wants to be president, so why doesn’t he act like a leader and champion changing a bad law? I don’t want a politician to have their own class of laws; I want them to make the laws we all have better.  We’ve got to stop and smell the roses, before we accidently ban them.

The Associated Press has been kind enough to give bloggers more a week’s worth of posts with all its antics bullying websites and charging people for quoting more than 4 words. After several instances have shown the A.P. quotes blogs (without links), the A.P. decided to quote another blog once more for old times sake. They decided to quote TechCrunch, for irony’s sake, in an article about all the brouhaha over their own anti-quoting policy.

TechCrunch’s Michael Arrington announced he sent the news wire a DMCA takedown notice and a bill for $12.50, according to the organization’s own pricing chart for quoting 22 words from his post. Arrington describe’s his actions:

Am I being ridiculous? Absolutely. But the point is to illustrate that the A.P. is taking an absurd and indefensible position, too. So I’ve called my lawyers (really) and have asked them to deliver a DMCA takedown demand to the A.P. And I will also be sending them a bill for $12.50 with that letter, which is exactly what the A.P. would have charged me if I published a 22 word quote from one of their articles.

Kudos to Arrington for standing up for bloggers and fair use.

Update 11:48 a.m. - The A.P. released a statement this morning saying the matter between it and the Drudge Retort, the original target of DMCA takedown notices, is closed.  No details about what was actually discussed.  Just move on, nothing to see here.  Let’s see how that works for them.

As part of my now ongoing series picking on the Associated Press, numerous examples of the organizations hypocrisy are coming to a broil.

The Associated Press is demanding bloggers follow guidelines on how to cite A.P. articles, requiring payment if even 5 words are copied. Michelle Malkin offers some magic math to see how much the Associated Press owes her for plagiarizing her blog posts.

Malkin finds A.P. articles from April and May quoting her posts, without providing links back. Malkin also reports the A.P. quoted the blog Patterico on Monday, the same day they were outlining their pay-for-fair-use program.

And both times the A.P. didn’t provide links back (print mentality), unlike us generous bloggers. Both Malkin and Patterico are kind enough to link to the A.P. articles plagiarizing them. I’ll stick with linking to just the blogs.

One theory about the A.P.’s attack on bloggers is it’s posturing against its own customers; newspapers who might realize they don’t need the A.P. anymore. The A.P. was formed to help local papers share reporting resources to cover major, national stories, but on the internet, the A.P. has become competition to these same papers. Suddenly, one user can see the same A.P. story on a dozen websites. Dorian Benkoil writes:

[Cleveland Plain Dealer Editor Susan Goldberg] said she was no longer reliant on The Associated Press for her stories from the region but instead was getting the original versions direct from the other sources around the state rather than paying “a big chunk” of her budget, about $1 million for rewritten AP stories. Picking up directly, on the Web, and putting other papers’ stories directly in the newspaper was also better quality, she said, and readers were noticing:

“I mean, we’ve always had access to news from all over the state. It was just, you know, it went through the AP mill. I frankly think we’re getting better, more distinctively written stories because they’re not going through the AP mill.”

Steve Boriss writes how the A.P.’s stance against linking is a sideways attack to prevent newspapers from just summarizing and linking to A.P. stories instead of paying for them.

Newspaper trying to cut its costs could theoretically drop its AP membership, keep its exclusive content to itself, and start each big story “According to the AP,” lifting as many words as possible then paraphrasing the rest. By cracking down now to limit the number of lifted words, the AP is making the price for defecting members higher.

Basically, the Associated Press, a non-profit organization formed to benefit the United States’ newspapers, is worried about its solvency and longevity (as it should be) and doesn’t want to evolve - it wants to maintain its cushy position of power. Unfortunately, this short term thinking is going to backfire as newspapers and other wire services, like Reuters, pioneer new web-friendly business models leaving the A.P. where it is - obsolete.

The Associated Press has released guidelines it expects bloggers and websites to follow when using its content. As I wrote about yesterday, the A.P. sent seven DMCA takedown notices to the Drudge Retort for user-generated headlines and less than 100 word quotes linking to A.P. stories. The A.P. has been helpful enough to offer a tiered system so anybody can license its content, ignoring for the moment the concept of fair use.

• 5-25 words: $12.50
• 26-50 words: $17.50
• 51-100 words: $25.00
• 101-250 words: $50.00
• 251 words and up: $100.00

Non-profits get lower pricing. How generous.

I’m not sure if each number count as a word, so I might owe the A.P. $12.50. Thankfully fair use still exists, no matter how much the A.P. likes to pretend otherwise (and benefit from for all for its articles).

The A.P. provides a helpful form for people to throw money at the not-for-profit organization (A.P. is non-profit, shocking, I know). You must paste the excerpt you wish to plagiarize, no more than 2,000 characters, and provide the URL. The A.P. wants to make sure its content is used wholesomely, so it “reserves the right to terminate this Agreement at any time if Publisher or its agents finds Your use of the licensed Content to be offensive and/or damaging to Publisher’s reputation.”

If the A.P. doesn’t like what you wrote, it can just cancel the agreement. I wonder if they give you your money back?