Some people may recall that I've given Greg Sandoval a hard time in the past. Today's news that he's told CNET where to stuff it both surprises and delights me.

I know a few smaller-scoped writers who have quit CNET or decided not to go there since this bomb first dropped, but Sandoval has major juice. He's been a well-respect, often-printed, and very public byline at CNET for years, often writing about intellectual property issues. Ironically, his resignation came over an IP-related story.

In case you missed it, there was a big Consumer Electronics show recently. As they do, lots of news outlets went there, reported a ton, and sifted among the offerings to come up with their top N things. It's a traditional way to write a show-wrapup story. Most people don't pay attention to such things. You could throw a virtual dart at Google News or any other aggregator on show closing day and hit one "Top N of $show" headline at least.

But someone at CNET's parent company, CBS, didn't like what they saw in CNET's list. CNET had already reviewed the Dish Hopper DVR in pretty positive terms - a device that allows users to skip commercials while watching DVR-captured content on a variety of home computing devices. CNET was reportedly going to make Hopper+Sling it's Best in Show until the bosses upstairs said "THOU SHALT NOT!"

To compound this idiocy, it appears that CBS actually stuck its political nose into the CNET newsroom and forbade CNET from any further reviews of Dish products, let alone giving them awards. So much for journalistic honesty and independence. And really you can now kiss any chance you had of CNET's review sinking into obscurity. It's been linked to a thousand times more since CBS's move than before, I'm sure.

The effect on CNET's staff has to be utterly demoralizing. Say what you like about some journalists, but I think you'll find the vast majority are honest folk trying to do good work and they are among the strongest believers in independent voices and at least the honest attempt at unbiased reporting. I can't imagine why any journalist who's looking for work right now would be looking at CNET, though I can understand why those who have to take home a regular paycheck to keep food on the table might stay there. I imagine Sandoval has bills to pay, too, and I hope he finds a better place from which to do that.

I'll be offline for Arisia from tomorrow through Monday. Don't burn down the house while I'm gone. There won't be any IP panels at the convention this year; their popularity has always been low. I'll be busy nonetheless.

If you're there and see me please stop me and say hi. If I don't already know you please let me know you read the blog; I like to meet readers. If not, I'll be back to writing here next week.

On his Whatever blog, John Scalzi put up the big-picture numbers for sales of his Redshirts novel. The entry includes breakdown by delivery format, to coincide with the end of the hardback and start of the softcover print lifetimes. Scalzi also delves into reasons why his particular book did very well (nearly 50% of its sales) in e-book format, and the value to him of working through major publishers.

Interestingly, he notes that the various formats do not appear to be cannibalizing each other; rather, they appear to be reaching distinct audiences. This dovetails with his comments around his participation in the Humble E-Book Bundle.

In November, I posed the question of how (in streaming music at least) can we get more than pennies to flow to recording artists?

Yesterday, in a posted preview of his talk for O'Reilly's TOC conference, Cory Doctorow looks at the question of why writers get so little. The answers, as you might expect from Cory, revolve around markets, business structures, piracy, and the complex web of incentives that are created by laws and traditions. It's not entirely accurate to say authors get paid poorly because they've always been paid poorly but it's also not entirely wrong - there has likely always been more material looking to get published than there have been spaces for publications by professional imprints.

In an era of (potentially) oversupply, the problem faced by the 99% of writers is breaking through. Getting noticed. Everyone knows about JK Rowling or Stephen King or Neil Gaiman now, but we don't know about the next Rowling, King, or Gaiman. Somewhere out there today are writers whose work could be as popular and game-changing, but that writer can't get noticed, can't get their first novel published, can't get out of the mid-racks, can't whatever it is that breaks a writer through to prominence. Or to the point where they reach their ideal audience, even if that audience isn't mega-millions best-seller sized.

Except now there sort of is. It's called the Internet, and self-publishing, and social media. It's a model whereby creative types can go through multiple channels to reach potential readers, build their audience, and start to make some money. In this model, two things are true that aren't true in other models. First, illegal copying doesn't hurt, it helps, and second regulation that tightens controls on the Internet and its freeform communities are harmful.

If your biggest problem is getting noticed, then you really don't care so much if someone pirates your story. Free publicity is free, and some percentage of people who get stuff for free will turn around and buy more stuff from you. That's good. Even if you're a fairly successful author like John Scalzi there's a good economic argument to be made that giving away your stuff is a long-term win.

And if you're someone who depends on the net and its social-media fabric to reach people and motivate them, then regulation that constricts that freedom by definition cuts you off from your funding sources.

So far this is all pretty familiar ground, but this column is just a teaser for Doctorow's keynote. I expect he'll expand significantly on these themes next month.

No one's death is ever light reading, but sometimes a worthwhile conversation emerges. recommended reading all three.

At Boingboing: Cory Doctorow's personal remembrances and responses.

At Naked Capitalism: Aaron Swartz's Politics by Matt Stoller introduces us to a broader view of Swartz's life work.

At the New York Times: Noam Cohen's "A Data Crusader, a Defendant and Now, a Cause" highlights the welcome news that MIT's new president has appointed the well-respected Hal Abelson to lead its own investigation into the 'tute's involvement and (one hopes) related policies.

It's certainly their motto. A musician acquaintance pointed me to this site, which is attempting to be musicians' platform of choice for promotion and production of sponsored content. The site has many similarities to Kickstarter and other crowdfunding efforts, but appears to be focused on a specific narrow slice of the business model: getting music and related content produced.

The site works with artists to construct projects around a specific deliverable such as an EP, an album, or a concert film. Backers can sign up at various levels, and there are rewards associated with pledge levels. Unlike Kickstarter projects don't appear to have "stretch" goals. Basically you (the fan) are pre-buying a deliverable you want, whether it's a digital download, a signed personalized vinyl, or whatever. If the project gets its funding then then your credit card is charged and the pre-purchased items are produced and delivered. The site also supports artists' pre-order campaigns where the material to be produced is already known and fans can just order the things they want, for delivery when done. This is similar to pre-order sales done by other content producers including books and games.

Also unlike Kickstarter, PledgeMusic has a way for artists to designate a percentage of funds raised to charities they select, and fans are encouraged to search the site by charity name as well. The linkage of performing artists and notable charities is venerable - I signed up for my first Amnesty International membership at a table outside an REM show *mumble*quitealotreally*mumble* years ago - but this is the first site I've seen that lets artists select and promote their charitable work. It's not just big-name charities either; scanning the site I also saw artists giving money to local things like a battered-women's shelter in their home cities.

The site's focus on musical artists is interesting. One of the things they offer is a team with expertise in these kinds of projects - it feels like more hand-holding for the musicians than you get with something like Kickstarter. There's also a music-oriented philosophy about the site, with discussion of "backstage" access for fans, and a philosophy that appears to come from founder Benji Rogers' own experience as an independent musician.

Today it was confirmed that yesterday's rumors were true: Aaron Swartz took his own life Jan 11. You may notice that Swartz's name is still listed on the left column here, as he wrote occasionally for Copyfight in the blog's early years. We also mentioned in passing that he had been in trouble for allegedly using MIT's network to download a vast archive of academic articles from JSTOR.

What I had missed (and props to TechDirt for staying with this story when it fell out of the headlines) was that the government had vastly upped the ante in its attempt to "get" Swartz even though JSTOR itself declined to press any charges once they talked to Swartz.

There is a bitter and sad note up on Lawrence Lessig's blog detailing the government's bullying of Swartz. We will likely never know what was on Swartz's mind or what led him to take the actions he took, but it certainly serves no great interest to see a brilliant young man destroyed.

Our condolences and supportive wishes to his family and friends. May his memory always be a blessing.

As I've written this blog I've tried to push the notion that creativity is a shared, situated, interconnected experience. The Western ideal of a lone genius in an isolated state suddenly having a light bulb moment when the creative product springs fully formed from their brow is just wrong. Creators are embedded in cultures, have seen, heard, been told past stories and respond to them even as they use them.

The first PBS Off Book episode of 2013 takes on this notion full force. Called "The Art of Creative Coding" it examines at high speed a few of the prominent points in a phenomenon that is part commercial enterprise, part open-source development, part art movement, part inspirational mass volunteerism. The notion that ties these together is that openness, sharing, and exchange are not accidents - they're fundamental primitives of the language. Take those away and the entire thing ceases to exist.

If you go to The New York Times this week you can see a story trumpeting how well traditional media companies did in 2012. Supposedly, we are told, these media dinosaurs were going to be destroyed by new media companies in 2012 and that didn't happen, so everything is rosy and there's no danger. Hooray and break out the champagne!

Or, maybe not. Let's dig into this a little bit. Forgive me if this gets a bit detailed. First of all, the measure of "did well" seems to be "had a large increase percentage-wise in stock price". In a year in which the S&P 500 (a benchmark index against which other things tend to be measured) rose 13%, media companies rose a reported 16-43%. That is a good set of numbers. Picking two popular tech companies, Apple and Google I find that Apple (despite hitting a 6-month low mid-2012) is up about 43% and Google is up about 15%. Sound familiar?

Furthermore I see Apple is trading around $525/share and Google is trading around $733/share today. In case you've forgotten basic math - which it appears the Times has - a 15% rise in a $730 stock is a LOT more than a 15% rise in a $58/share stock (which is where Viacom appears to be today). Yes, percentage rises matter and yes performance compared to the S&P is an interesting number, but let's be realistic here.

It's worth digging into what, exactly, is powering this rise in the old-media companys' stock prices and it's two things. One is that they're using their cash to buy back stock and pay dividends. Tech companies - even the fantastically profitable ones - still tend not to do that. This makes the old-media company stock more valuable to investors, particular in times of sluggish markets. For those not into financial wonkery, it may be surprising to hear that the markets these days are extremely sluggish, with price volatility at all-time lows and trillions of dollars that used to be invested in the market having moved elsewhere.

So, a lower-priced stock that pays dividends is more attractive to investors than a higher-priced one that does not pay dividends. Not exactly earth-shaking news. More importantly, it tells us exactly nothing about the prospects for the future of these businesses, nor the media models they represent.

Still, it's worth peeling back the covers still a little further, which you can do with an awfully titled article in the Atlantic, Derek Thompson's "How the TV Business Got Rich Off the Thing That Was Going to the Kill It: The Internet". A lot of it is a rehash of the Times story, but I encourage you to scroll down to the graph titled "How Does the Cable Industry Make Its Money?"

The answer: selling Internet. Most people get their IP connections from a cable company, and some cable companies scored big content deals with Internet companies this past year that further increased their bottom lines. Other companies (*cough*NewsCorp*cough*) did internal reorganizations to wall off big money-losing parts of their business. The result is a situation in which non-old-media revenue is propping up old-media companies. The broadband you're buying from that cable company comes with a hefty mark-up, and is likely a protected near-monopoly. Only a tiny fraction of the country has any choice in where to get Internet service.

All that fat-margin IP revenue serves to mask the fact that the television and cable-channel business is a dying enterprise. Both Thompson and Carr (Times) are careful to hedge their stories in the final 'grafs but I'll say it flat-out: old media companies will change or become walking dead in 2013-2014 and buried soon thereafter.

When I posted my piece last week about Andrew Sullivan's gentle freemium model I missed a response by John Scalzi.

Scalzi, in his Whatever blog for Jan 3, noted that this is similar to what Sullivan has done in the past. He notes that Sullivan did something similar nearly 10 years ago and describes why Whatever is unlikely ever to use a subscription model.

Most interestingly, though, he notes that many of Sullivan's readers "...pay $20 a day on coffee and lunch; it’s not a lot." That stopped me to think, as I don't spend that kind of money per day and it did seem like a fair bit to me. However, perhaps this means my perspective is too parochial. Perhaps there are people who don't think anything of spending $20/day eating out and for whom $20/year would similarly be below the threshold of concern, even if they had to pay it to get access to a dozen or so writers' contents that they wanted.

It's been received wisdom for some time that there are significant price-points in selling certain objects. You can get people to respond in highly non-linear ways by varying the price of something in a linear fashion. And maybe $20/year is that kind of a price-point. It's certainly true that people used to subscribe to many paper magazines that cost more or less $20/year. And some of us had comic-book or other habits that we were comfortable with as long as it didn't seem "too expensive."

So maybe I'm just an old cheapskate here and it's no big deal. What do you guys think?

I mentioned last week that I'm eagerly awaiting results from sales numbers for e-books around the holidays. Meanwhile, readwrite has a piece up by John Paul Titlow on digital music sales for the last week of December, and it appears they hit it out of the park.

According to data from Nielsen SoundScan, reported in Billboard online, the week ending Dec 30 saw a record number of digital songs sold, about 55,740,000. This is a huge rise on the comparable week of the previous year, which saw 46.4 million songs sold. No doubt many of those songs were given as gifts over Christmas, but some also surely represent purchases by people who wanted digital music and didn't find it in their unwrapped gifts. This past year's rise is also significant in that it's continuing an upward trend from past years. The music sales business was in decline for much of the past decade, and only recently turned things around.

Titlow attempts to look at why digital music is growing, touching on the familiar themes of ease of use. Interestingly, he reports that "Sweden saw a 25% drop in illegal filesharing after the public launch of Spotify." This is more or less the trend I expected we'd see.

What neither Titlow nor Billboard address, though, is what the flow of money back to artists looks like. It's one thing to say that digital music sales are improving recording companies' bottom lines and a wholly other thing to say that digital music sales are helping creative types make a better living.

Last week I noted that so-called deep journalism isn't something that we know how to do well in the 21st century. Investigative reporting - the most common type of deep journalism - requires investments of time (months or years) and resources that are hard to sustain without a regular paycheck. Deep journalism also produces results that aren't easily amenable to summary, nor to the quick-hit forms favored by many social media such as news aggregators, Twitter, etc.

In his Guardian column this week, Dan Gillmor looks at the latest experiment by well-known political blogger Andrew Sullivan, who is building a new model he hopes will be sustainable. The freemium idea (some stuff for free but the best - premium - content for pay) is not new, but so far it's also not been tried in a deeply thoughtful way to my knowledge.

For example, Sullivan is intending to construct his site so that links to it don't ever hit the paywall. Bloggers and aggregators can feel confident pointing their readers over, which is an important step. This makes the paywall portion of their site extremely easy to circumvent - and that's by design. By analogy both NPR and the Times are listed as news entities who take no extraordinary effort to prevent people getting their content for free but instead depend on a combination of big contributors (or advertisers) and people being willing to pay for value.

Gillmor identifies what I see as the biggest problem with this philosophy - no matter how honest or willing any person is, they only have so much cash available. I can easily identify a dozen people whose content I find worthwhile to read pretty much whenever they produce it. However, if I had to pay $20 per year per writer I'd quickly find myself unable to continue. My guess is that this model will work OK for a few people but isn't going to scale.

Joe Mullin in today's ars technica has an appropriately illustrated example of some of the worst misbehaviors of patent trolls. (I won't even try to copy that picture - go see it for yourselves.)

The specific case he discusses involves a shell entity that had its law firm send around "pay up or else" letters accusing IT service providers of violating patents by doing normal business things - in this case scanning a document and mailing a PDF. The troll claimed to have a patent on this process, a ludicrous claim in the first place, and then wanted to enforce the patent against people using equipment, rather than against the manufacturers whose equipment was claimed to be in violation of the patent. But wait, it gets worse.

The protagonist of Mullin's story - Steven Vicinanza- decides to fight back and wins in court - yay! Except that as I blogged about a couple weeks ago, this NPE had rigged the game. The court victory just absolved one company - it didn't touch the patents and claims. Those toxic assets have apparently been distributed to "a network of at least eight different shell companies" that Mullin documents. Each of them is now spreading demand letters, blanketing something like 2/3 of the USA. And, like bullies everywhere, these trolls are targeting the small, poor, and presumably weakest defendants.

According to Mullins (quoting research by Professor Colleen Chien of Santa Clara University) this practice of suing users rather than makers is increasingly popular, presumably because they can be bullied into paying up more easily. Shades of the Copyright Cartel going after individual song downloaders!

As I noted last month, the legal landscape is vastly slanted in favor of this kind of activity. NPEs are immune to counter-suit, they can mass-mail demand letters to collect from the weak and the scared, and the cost of fighting them to the point of invalidating their bullshit patents would be much higher than the costs of paying their extortion demands. Yes, the patents are bullshit - ars links to them and you can go read them for yourself. Vicinanza apparently spent $5000 on a prior art search that was good enough to make the trolls run and hide, which leads me back to my tired refrain of "can we please get the USPTO to stop issuing crap patents."

You can read Mullin's story to follow the shenanigans that are still going on. It's pretty clear that the people involved are doing everything they legally can to hide their tracks, erase past identities that have gotten tainted, and make as many fast bucks as possible. It's bad behavior and bad news all the way through, so if you ever wondered why there's bad blood around patent trolls now you know. Certainly not all NPEs behave this way, and there remain good and valid reasons to use NPEs but that's going to get buried under the heaps of rubbish kicked up by abusers like this.

(Thanks to an anonymous Copyfight reader for the initial tip.)

In this case, what didn't happen in e-book pricing. Those of you who read Jon Sargent's (Macmillan) year-end letter will know that the people opposed to settling with the DOJ have pointed out that there would be nothing to stop a precipitous plunge in e-book prices. Except somehow that didn't happen in 2012.

Since several of the big publishers settled immediately, their e-book prices have been subjected to discounting for months. Instead of maintaining the 13.99 and up price that publishers were accused of colluding to maintain, prices have slid downward a bit, but not crashed. According to David Streitfeld's piece in the Times this week, new e-book prices seem to be hovering around $11-12.50 even as sales climbed by over a third.

It's possible, of course, that Amazon is just biding its time until all the publishers are settled, but that seems unlikely. Amazon doesn't discuss its pricing strategies in public, but it has shown it has extremely fine-grained control over what prices it offers on its millions of catalog items. It is fully capable of discounting some e-books while maintaining price floors on others. Instead, Streitfeld hypothesizes, the sustained higher price may be due to another things-that-didn't-happen: e-books have not displaced physical books, at least not to the degree predicted.

The causes cited for this are the usual ones, plus frankly there may be some buying fatigue among e-book consumers. People who bought new e-books or bought e-books for the first time seemed to be stocking up a large selection and it's possible they're taking time out to digest what they've already bought before making more purchases. It will be very interesting to see what the numbers look like next month once analysts have had a chance to digest the purchasing data from this Christmas season.

The other, more interesting to me, possibility is that we're starting to understand the shape of the niche that e-books will occupy in the sales ecosystem. As Streitfeld says, the demise of retail book outlets may itself be hurting e-book sales, particularly among the majority of purchasers who are either new to e-books or who still buy both e-books and physical books. These buyers may like the idea of browsing, holding things in their hands, etc - the physical aspects of book-shopping. That they then went home and bought e-books was bad news for the retailer, but if in fact that first step is important to the e-buying process then the lack of a physical presence may spell trouble for e-book sales and for converting physical-book readers into e-book readers.

In addition, e-books are generally tied to a physical product - their reader. You can discount a book if you're selling a reader at a good margin. But if the market for readers is saturating and you're having to discount readers then you may not be able to sustain losses on e-books. Likewise if you depend on sales of a reader in order to push e-book sales then the fortunes of the two will tend to rise and fall together.

So yes I expect e-books to get cheaper in 2013, but not by much. For prices to drop significantly publishers will need to retool their businesses to be able to pass on the cost savings of digital production to end readers, and to do so in a way that doesn't destroy their physical-book pipelines in the process.

Earlier this month David Post posted a commentary (at Volokh Conspiracy) on a recent paper from conservative scholars who looked at the foundations of copyright law.

The issue is one that has been raised here as well, for example in the comments to my entry on "What is the Patent Problem?" It has to do with what we believe the founders and authors of the Constitution thought they were doing when they established Congressional authority in Article 1 Section 8.

Post says (and I agree wholeheartedly) that the authors of this report are wrong on historical ground, and wrong on the merits. He notes that there's literature and scholarship on this question and in general there's Constitutional scholarship that shows what the framers intended was that the Constitution embodied a grant of rights from the people (as represented in the Convention) to the government. There's nothing to support a "natural rights" argument that I know of.

And, as I've said repeatedly in the past year, it's pretty clear that what Post calls the "utilitarian" analysis is also failing badly - IP as we currently practice it is inhibiting creation, not promoting it. The economic justifications made for the continual expansion of protectionist regimes are purely for the benefit of large corporations. Individual creators are trotted out regularly as excuses but when it comes to writing the checks the Cartel are nowhere to be found.

Despite a year that saw big publicity moves against file-sharing and torrent sites, piracy of television shows remained essentially unchanged in 2012. The un-bylined story published today lists the most-pirated shows of the past year based on a survey from TorrentFreak.

The survey also repeats conclusions we've come to in the past decades of the copyright wars. Lack of any publicly streamable alternative such as Netflix or Hulu led to HBO's "Game of Thrones" doubling its US viewing numbers through illegal copies. This is the same lesson that's been on offer since early Napster days.

There's also a continuing correlation between delayed release and illegal copies. Australia, where people are supposed to wait an arbitrary extra week more than the rest of the world for things, tends to score highest in the illegal viewing numbers. Well, duh. If the Cartel haven't yet figured out that worldwide simultaneous release is good for business and delayed releases are bad I'm afraid I can't help them.

The story lists several major court and police actions taken against sites such as The Pirate Bay, Megaupload, Newzbin2, and Surfthechannel - all of which were taken offline in whole or in part the past year. Shockingly, taking down big-name linking or torrent sites doesn't actually reduce the flow. This is the same lesson that should have been learned when Napster was first shut down. I used to refer to it as "smashing mercury with a hammer." It's visually satisfying and absolutely ineffective at reducing the amount of mercury.

Perhaps a slightly new lesson is that most of the top copied titles are behind paywalls. That would indicate that paywalls themselves don't reduce piracy, but leaves open the question of how the owners of the shows should create revenue. Just because something costs money isn't an excuse for illegally copying it, but it does indicate that there is a consumer marketplace that's going untapped.

Of course, the Cartel's response is not creative thinking on how to market to those consumers - it's a repeated effort to pass draconian laws. I think I'm safe in predicting that those won't be any more effective in 2013 than they were in 2012.

I don't know what to make of this pair of news items this week in the infamous USD 1 billion case. First, Judge Koh denied Samsung's request for a new trial. That's surprising to me since I was under the impression that lying during voir dire was pretty typical grounds for a new trial. Judge Koh appears to have reasoned that Samsung's lawyers were informed about the juror's potential conflicts and it was their own fault for not doing enough homework. I have no idea if that decision can be appealed.

What can (and will) be appealed is the second item: the USPTO's reversal of its own decision to grant a particular patent to Apple related to gestural UIs. This patent was one of the major ones that Samsung was found to have infringed; however, if it gets chucked out then it's unclear what happens to the verdict that was in part based on it. Apple will contest this change in the Patent Office's position, no doubt.

Meanwhile, in a minor fit of sanity, both sides have separately agreed to withdraw requests that judges block sales of each others' products. Lawsuits will continue until the sun goes nova and grows cold, one expects.

Three items from the backlog and I'll put them all in here under the same heading. It's clear that 2012 saw lots of streaming services but little differentiation and not nearly enough cash-flow. Companies that survive through 2013 will be those that can separate themselves from the pack and convince customers they've got something worth paying for.

Netflix's play is to challenge cable channels like HBO in the original-content space. WIRED called this "Big Data" but I think it's more about a la carte. It's true, as Roberto Baldwin points out in the article that Netflix has a lot of data on peoples' preferences and can track popularity in astonishing levels of detail. But as I noted earlier this year, a lot of people cut the cord in 2012 (including me) because they were tired of paying a big yearly bill for lots of shows they didn't watch.

What Netflix can do is not just pick a potential original-series winner via its algorithms, but it can price the offering according to individual wants and tastes. It can bundle the series with peoples' existing subscriptions, it can offer a higher-cost tier that includes original content, and it can offer a pay-as-you-watch model for people who are unsure that they will indeed love the new content. This is the true advantage of an Internet-based company over a traditional cable-channel company and it's where I expect them to win big.

Speaking of data, Tim Westergren of Pandora showed up on TechCrunch last month to tout his company's ability to use data to help artists. Carefully avoiding the sticky financial questions that have dogged the service in the last couple years, Westergren concentrated on the potential of a direct connection between musicians and their listeners. A connection facilitated by Pandora, of course. If I read between the lines of what Westergren is saying, it appears that he and his company are making a play for the independent artists. A big-name, label-backed act isn't going to see much (if any) revenue add from Pandora. So why would someone let their music be streamed on the service? Because it means discovery, because it means being connected to the people who want to listen to your music, and because it means learning enough about those people that you can adjust what you do to reach them and make more money from them. Whether it's something as simple as picking the right people to show CD sales discount ads to or as tricky as figuring out which cities you want to hit with your limited tour budget, data is going to be your friend. If Pandora has the data then artists may find the whole deal profitable enough to participate in.

Sticking to the notion of data and socialization, I wanted to round off this trio with a nod to SoundCloud's moves this month toward socialization of the music-streaming experience. I've been a long-time user of SoundCloud, in part because it's a reliable, easy-access and popular site for the kinds of modern electronic music that I favor.

As with many such sites I've long been able to follow artists, favorite things, and so on. Recently they added Facebook-like dashboard and "who likes who" features. Despite my initial skepticism I've found the features really useful. Like Facebook, SoundCloud now gives you a Dashboard on login that shows you things your favorite artists have uploaded. But you also get to see things they favorited on the site. This isn't technologically new, and certainly other social media sites such as Twitter let you favorite things. It took me a while to think about this and try to understand why it works better here than there.

What I think makes it work is the specialized nature of the community. On Facebook I have over 350 "friends" and they have a wildly varied set of interests. My personal interest in those 3500 things is small or none for many of them. So if a FB friend likes something its information value to me is low. On SoundCloud not only do I have a much smaller set of people I follow, each of them is a working artist with an active interest in hearing and using new music. What interests them is likely to be fresh and interesting to me as well. That's not guaranteed, but my experience in the past month is that it has a better than 50% hit rate, which is way higher than any other social-media site I've used.

SoundCloud is also linking to the rest of the world, but to my eyes that's not going to provide unique value - it's just a convenience. What's making SoundCloud a site I return to over and over again is the active participation of engaged people with high levels of knowledge and similar interests to my own. How that turns into revenue for SoundCloud and the participating artists is still to be seen, though.

Tor's John Sargent has a year-end letter out, and it's kind of sad. He notes that Macmillan/Tor continues to be the smallest of the publishers after the Penguin - Random House merger but is certain that won't matter.

He also notes that they're the last one standing in the DOJ suit over e-book price fixing. Penguin and Random House have agreed to the DOJ's terms, presumably so there won't be an impediment to the merger, leaving only one party to emerge from the court-ordered mediation process. If nothing changes, then trial is scheduled for June of next year.

It's sad that Sargent doesn't see the writing on the wall. He notes that they were sued by the DOJ, 33 individual states, a class action group, and the European Union. It's possible that all of those entities are wrong and Sargent is right. But I wouldn't bet on it. That's a lot of attorneys and attorneys-general who all saw the evidence and thought it was case-worthy. Maybe Sargent and his lawyers are smarter than everyone else on the planet, but I wouldn't bet on that either.

It's sad that Sargent can't see that the moves Macmillan have made precisely miss the mark. He's happy that his company have negotiated new agreements that "...allow 10 percent discounting on individual books priced at $13.99 and above..." Uh, whoop de do? We've had ample evidence in recent months that there's a lot of market to be made in lower-priced e-books. If Macmillan can't make money with its current cost structure on lower-priced books then maybe the right thing to do is change that structure, not forbid discounting. Macmillan's new agreements are still too restrictive, despite his claims that "[a]ll the new contracts are compliant with the government’s requests in their complaint."

It's also sad that the government's settlement offer is so awful and they won't budge. They believe they have a winning hand (particularly now that everyone else has settled) so there's little incentive to budge, but the fact remains that the DOJ is pretty much handing Amazon the e-book world on a plate. That's unnecessary, and will result in a monopsonistic environment. The DOJ could have been much smarter about this, though given its track record with, say, financial institutions it's doubtful anyone inside there knows how to craft any sort of settlement. But I digress.

The saddest part of Sargent's missive is that he doesn't yet have good data on the effect of going DRM-free. The most revolutionary and potentially freeing move in e-books in 2012 is likely to be swamped by the effects of the suit and trial to come.

To which my only possible sub-headline would be "What is he smoking?" Tim Lee's ars technica sub-head is much nicer.

Look, the America Invests Act (AIA) is an interesting piece of legislation with some good ideas behind it. Like any bill that makes its way into law, those good ideas are sort of diluted and distorted from their original form in order to make the compromises necessary to get a deal done. Fine. Good. That's how these things work.

But in this case, it's not a matter of compromise so much as it is an uncompromising unwillingness to put his own house in order that's affecting Director Kappos. Early in December he gave a speech in which he touted certain provisions of the AIA, particularly what's called "post-grant review", as a solution to the current patent-litigation mess. In this review people who aren't involved in the original patent are allowed to challenge a patent once it's issued. This is similar to what I discussed as already happening in my previous patent-system post but it has the advantage that you don't have to go through a whole trial in order to make a challenge happen.

That's good, but it's still too late. And Lee is spot-on in his response to Kappos when he says that the speech "...ducks the central question in the software patent debate: do patents, in fact, provide a net incentive for innovation in the software industry?"

Indeed, and Kappos's focus on post-grant review is itself a tacit admission that the USPTO is giving out patents that it shouldn't. Obviously, if it issued better patents in the first place there would be no (or at least much less) need for post-grant review. If we're going to have any hope of hacking ourselves out of the current weeds we absolutely must push the solutions upstream to the application and review stages. How about that, Mr. Kappos?

The short answer may be "yes". Commentary in a recent issue of Greg Aharonian's PATNEWS email newsletter (not on the Web, sorry) highlighted several points that lead one to think we may have brought this on ourselves, at least to some extent.

As I noted a couple weeks ago, there's a significant advantage to doing your patent litigation through a non-producing entity (NPE) in that the NPE is effectively immune from competitor counter-suits. Since they make nothing, they violate no patents themselves. In addition, you can (and here I use the term advisedly) 'rig' the NPE to be little more than a shell, with few or no assets that could be taken in the case of adverse judgment. This is similar to the shell game that corporations (and individuals) often play, separating out assets that could be seized from any legal liabilities - just now it's being applied to patent lawsuits.

In addition, PATNEWS reports, there was a rule change in how one can file a patent suit. In particular, new rules limit the number of defendants that can be named. In one way that's good, because it prevents suit-happy patent holders from sweeping huge brushes around, hoping to catch someone who would rather settle than fight. But in practice what it has meant is that instead of one suit with 10 defendants, NPEs now file ten separate lawsuits. The result is an apparent inflation in the absolute number of lawsuits, but that's something of an illusion.

It's not wholly illusory in that the ten separate suits are a larger burden on the court system - this is why courts often try to consolidate cases where possible - but it does mean that there may not be so large a rise particularly if you compare "number of patent lawsuit defendants" on a year-over-year basis.

Another commenter pointed out that reversals (at appellate level) of district court rulings has risen to nearly 50%. A reversal can come in many forms - sometimes a case is reversed and ended, but more often a reversal means it's going to be appealed further or be remanded back down to the lower level for a new trial. As the number of reversals goes up, the overall count of cases goes up. And of course a retrial may itself result in an appeal, and so on and so on.

Reversal on appeal also complicates matters. Generally speaking it's the trial court's job to find on matters of fact. On appeal, each side more or less has to accept the facts as presented at trial but argues that the law was inappropriately applied or that there was some other procedural error. In effect the arguments on appeal of a standard case tend to be totally different. However, in patent cases, the appeals court can sometimes rule a patent or patent claim invalid. This can force a whole new trial as the losing side now has to make its case with lesser (or at least different) facts available. The result, again, is an apparent increase in the number of patent trials.

None of this is to say that there aren't too many NPEs nor horrid abuses of the court system (as there are horrid abuses of the patent system). But it does point out that people bemoaning the current patent litigation system may need to examine things a little more closely. And because I like being right, I claim this sort of analysis lends weight to my assertion that trying to fix the patent system problems at the court level is too late. We must make fixes upstream, at the application, review, and granting stages.

I find myself head-thumpingly frustrated by the fact that all parties in the Copyright Wars continue to get their statistics wrong. This time, ReadWrite trumpets the idea that participation in social media by musicians drives music sales.

I realize that's an appealing and perhaps even common-sense notion and they even quote a graph with the word "Causality" on it, but that is not in fact what is going on and it's not even what the original graph ought to be claiming.

What happened, near as I can make out, is that an outfit called Next Big Media did some data analysis. They looked at some public numbers, such as hits on an artist's Wikipedia page, publicly released iTunes sales, and so on. Then, to their credit, they did some actual statistical analysis. In particular, they did what's called a Granger causality test, which attempts to show that one variable has enough predictive value in its time series to be assigned causative agency in another variable.

Causative agency is much stronger than the usual notion of prediction and it's a tricky thing to pin down. You can, for example, see that in certain months there's a large rise in the number of people wearing overcoats. The calendar date is therefore a good predictor of overcoat use, but it's not a causative factor.

Using a Granger test is good in that it avoids the most simplistic "correlation = causation" failure. However, as Wikipedia and other sources will tell you, Granger Causality is not necessarily true causality. For one thing, it's a test that works only when you have two variables, not three (or more). For another, it's known to fail when there's a (so-called hidden) variable that also follows the same time series. In this case, we can call that variable "popularity". What this study is telling you is that if you can tell when someone is getting popular then you can predict they're going to sell more music.

This, ladies and gentlemen, is not particularly enlightening. We know this, and we further know that public resources such as Facebook pages, Google searches, and Wikipedia article activity are reasonable measures of popularity, particularly when you measure what's popular within the limited subset of the population that is online and connected. Unsurprisingly, this is also the subset of the population that is most likely to buy from iTunes rather than Wal*Mart or other physical music retailer.

There are other methodological flaws in the study - for example, they seem not to be taking into account things like "has just released a new album" or "has appeared on The Simpsons" or "is touring my country" or any of a zillion other factors that may cause jumps in social media popularity, and likewise jumps in sales. I could go on, but you get the gist.

I realize that news outlets have to fill a certain number of (even virtual) column inches, but really when the best thing you can conclude is "artists should make sure their Wikipedia pages are updated and maybe get on Twitter too" - that's pretty lame.

Someone representing Sega Japan has been going hog-wild with DMCA claims against fans on YouTube.

If you aren't familiar with gaming and YouTube, let me give you a bit of background. People who game love to make videos. They make response videos, they make trash-talk videos, they make commentaries. There are also millions of helpful videos - everything from "see this cool mod for this game" to "here's a walkthrough of that tricky bit in Act 2." One of the best ways to judge the vibrancy of a game is to search for it on YouTube. A game with a lot of fans will have a lot of vids and those vids will have recent responses and active comment threads. So when a gaming company steps in and starts hacking away at the fan video activity around their games, it's a big deal.

The picture is complicated by the fact that many fans make money on these videos. There are gaming channels and people who are paid to do walkthroughs, to publish guides for third parties, to live-stream competitive gaming matches, etc. Some of the people who do make money at this have complex agreements with the games they cover, but most of the smaller players do not. So when Sega issues DMCA orders against vidders the result can be the suspension of an entire channel or YouTube user, cutting off legitimate sources of income, not to mention running roughshod over fair use. The professional game-caster known as "Total Biscuit" noted that Sega has even targeted videos of people talking about the game, with no Sega material shown.

In this case, Sega's actions have been oddly specific, targeting pretty much everything related to some very old content. The theory is that they're going to put out a new installment in the franchise and want to control what items come up in searches. I can't express my level of disgust at a corporation using the DMCA to sabotage someone else's Google-juice.