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Shownotes for The Singularity Law Podcast: Episode 4 for October 19, 2008

Our Panel for Today:

• Josh Kagan, author of The Josh Kagan Blog
• Prof. Michael Scott of The Singularity Law Blog

DRM and Activation in Video Games

• EA’s CEO speaks to Gamasutra about DRM.
• Ars Technica: EA’s DRM, arrogance may cause gamers to skip good titles

Anonymity on the Internet

• Anonymous proxy servers: Necessary or evil?
• The growing cowardice of online anonymity
• UK/Germany: “Disclosing Encryption Keys and IP Addresses
• Men defamed on dating sites
• Josh Kagan: JuicyCampus and the Limits of Section 230
• The Internet as Conduit for Hatred & Violence
• Passports will be needed to buy mobile phones

Google and YouTube refuse to grant special DMCA treatment to McCain Campaign Videos

• McCain Campaign’s Letter to Google/YouTube
• Ars Technica: McCain/Palin campaign angry over bogus DMCA takedowns
• YouTube to McCain: No special treatment for DMCA takedowns
• Judge Rules That Content Owners Must Consider Fair Use Before Sending Takedowns | Watch the video here
• Massive Takedown of Anti-Scientology Videos on YouTube
• Bogus anti-Scientology DMCA notices sent to YouTube linked to Wikipedia user

Cybersquatters: The Hidden Trademark Danger

• Trademark Owners Must Pursue Cybersquatters or Potentially Lose Their Trademark Rights
• Southern Grouts & Mortars, Inc. v. 3M Co., 2008 WL 4346798 (S.D. Fla. Sept. 17, 2008)
• Southern Grouts and Mortars v. 3M Co., Second Amended Complaint

The Elephant is in the Library: Digital Libraries Online

• Universities launch elephantine digital library

Final Thoughts: Can a record label infringe its own copyright? One hosting provider thinks so.

Click here to download this week’s episode.

Here are the show notes for this week’s episode:

Shownotes for The Singularity Law Podcast: Episode 2 for October 5, 2008

Our Panel for Today:

MPAA v. RealNetworks

• WSJ: “Right to Copy DVDs to PCs at Center of Copyright Spat”
• Wired: “MPAA, RealNetworks Wage Court Battle Over DVD-Copying Software”
• LA Times: “MPAA vs. RealNetworks”

RIAA Lawsuits – Discussion of the EFF’s Report

• EFF Report: “RIAA v. The People: Five Years Later”
• EFF: “RIAA Lawsuit Campaign Losing Credibility“

Did Statutory Royalties Almost Spell the End of iTunes?

• Apple’s Submission to the Copyright Royalty Board
• IPKat: “Is this the end for iTunes?”
• Tech Law Prof Blog: “Apple Threatens to Take Its iBall and Go Home if Artist Royalties Rise”
• LATimes: “Digital music royalties for songwriters left unchanged”
• “Copyright Royalty Board Keeps Download Rates The Same; iTunes ‘Saved’”

Online Poker Cheating Scandal

• “‘Back Door’ Cheating Scandal Rocks Online Poker”
• MSNBC: “Poker site cheating plot a high-stakes whodunit”

Network Neutrality: A Few Observations

• Michael Scott Writes: “Network Neutrality: To Regulate or Not to Regulate”
• WGA: “Winning the Fight for Net Neutrality”

Talking Point of the Week: MI6 Photos and Data Accidentally Sold on eBay

• “MI6 Terror Photos, Data Accidentally Sold On Ebay”

This recording is an informational resource only. It is not designed to offer legal advice.

The Issue of the First Sale Doctrine

The First Sale Doctrine as codified in the Copyright Act¹ permits a purchaser to transfer ownership of a particular copy of a copyrighted work as long as no additional copies are retained. Game discs qualify for this,² and so they can be freely sold. Historically, this has never been much of a problem for the industry. Unlike novels and videos which are often used once and then archived, consumers have traditionally resisted selling their used games because it’s a different kind of product. But now, with companies like Gamestop building retail businesses that aggressively promote the sale of used game discs, the situation has changed significantly. Some publishers and developers fear that an overly powerful secondhand games market could strangle the industry by cutting off consumers’ demand for new game discs. With new games costing as much as $30 million to develop in an industry that employs around 100,000 Americans, it’s not hard to understand that fear. On the other hand, novelists and movie-makers have been dealing with the First Sale Doctrine for ages, but those industries have managed to survive even with the proliferation of lending libraries and video stores.

Digital Downloads as a Work-Around

One potential solution would be for the industry to move more toward digital downloads. Some of the most successful games in recent weeks, such as Braid and the highly anticipated Capcom title Mega Man 9, have found tremendous success as downloadable games on platforms like Nintendo’s WiiWare, Sony’s PlayStation Network, and Microsoft’s Xbox Live Marketplace. Many developers have also found success on Apple’s App Store, a service that puts application and game downloads at the fingertips of iPhone and iPod users. The use of digital downloads has a number of advantages to the industry, one of which is that downloaded games are typically locked to a single device through the use of DRM, cutting off the First Sale Doctrine at its knees.

DRM Problems

But moving further into downloadable games also has serious consequences for the industry. While mainstream gamers have generally been accepting of DRM, with services like Nintendo’s Virtual Console reporting sales on the order of 10 million games sold per year,³ critical demographics such as the 18-35 year-old male group have expressed dissatisfaction with the DRM restrictions placed on popular games like EA’s Spore. With the entertainment sector moving increasingly away from DRM, it’s not clear that the video games industry would benefit in the long run from increased reliance on a dying technology.

Storage and Bandwidth Problems

Another more important problem is that the storage and bandwidth limitations of game consoles don’t always meet the needs of today’s cutting edge games. For example, most games for the PlayStation 3 ship on Blu-Ray discs that can hold up to 50 GB each. Some recent games such as Konami’s Metal Gear Solid 4: Guns of the Patriots have already managed to fill these discs. Delivering games this large over the Internet is impractical with current technology because they would take far too long for players to download and would occupy too much space on game consoles’ hard disks.

There’s no denying that this situation puts the industry in a tough spot.

The Best Solution: Leverage Games’ Perceived Value and Add Replayability to Game Discs

I think that the best solution here would be to make some small changes to the nature of mainstream disc-based games. One of the things that distinguishes a game disc from a novel or a video is that, in many cases, once a novel or video has been used (i.e. read or viewed) once, there might not be a lot of perceived value to the consumer in using the product again. That’s why there will always be a sizable block of consumers who rent many DVDs but don’t buy any. But the video game industry can be different by crafting products that retain their perceived value even after they have been enjoyed once.

One way to do this is by providing gamers with experiences that go beyond a typical “single player campaign” experience. Nintendo’s Metroid series was a pioneer in this area; they contain items and areas that are not essential to finishing the game, but that greatly enhance and change the nature of the game if the player chooses to explore. Vivendi’s Diablo series is similarly innovative, with dungeon layouts and discoverable items that are randomly generated each time the game is played, presenting the player with a slightly different experience on each playthrough. Some other recent games have begun to emphasize Internet multiplayer capabilities that pit players with (or against) other players from around the world. This creates communities in which players build perceived value in the game over time. It also encourages players to push sales of those games through word-of-mouth advertising because players know that the more people have the game, the better it will be. Finally, another solution is to make available new content in the form of downloadables. These can be offered to players for free simply to drive sales even as the game gets older, or they can be sold to players in the form of revenue-generating micro-transactions. It’s worth mentioning that a gamer who has invested even a few dollars in game-related micro-transactions is probably far less likely to ever sell his copy than someone who has invested nothing other than the purchase price.

Americans spent nearly $19 billion on video games in 2007, and that number is set to look even better once 2008 comes to a close. Over the past two decades we’ve watched this industry adapt dynamically to a number of consumer and technological trends such as Internet piracy and the emergence of the “casual” games market. In every case the industry has emerged stronger than it was when it went in. I wouldn’t lose sleep over the emergence of a used games market.

Save your fear for Capcom’s upcoming Resident Evil 5 launch instead. If it’s anywhere near as good as its predecessor, when that hits in March 2009 I think we’ll all be having a few zombie nightmares.

1. 17 U.S.C. § 109
2. Vernor v. Autodesk, Inc. 555 F.Supp.2d 1164 (W.D.Wash.,2008).
3. http://uk.gamespot.com/news/6185358.html

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Here are the show notes for this week’s episode:

Shownotes for Singularity Law Podcast Episode 1 (September 29, 2008)

Our Panel for Today:

Cloud Computing

• “Cloud computing” (Wikipedia)
• “Cloud computing may draw government action”
• “Clouded in uncertainty – the legal pitfalls of cloud computing”
• “Cloud computing is a trap, warns GNU founder Richard Stallman”

Walmart and DRM

• “Wal*Mart shutting down DRM server, nuking your music collection — only people who pay for music risk losing it to DRM shenanigans”
• EFF: “And Walmart Makes Three: Another Music Service Plans to Shut Down DRM Support”
• Josh Kagan Writes: “Ten Reasons Why DRM Schemes Are Bad For Society”

Capitol Records v. Thomas

• Text of Court’s Decision (Sept. 24, 2008)
• Josh Kagan Writes: “Capitol v. Thomas: For RIAA, Better Than “Making Available” May Be Difficult To Prove”
• Michael Scott Writes: “Prove Our Case? . . . We Don’t Need to Prove Our Stinkin’ Case!! Just Fork Over the Money”
• EFF: “Capitol v. Thomas: Judge Orders New Trial, Implores Congress to Lower Statutory Penalties for P2P”
• National Car Rental v. Computer Associates, 991 F.2d 426 (8th Cir. 1993)
• Perfect 10 v. Amazon.com (9th Cir. 2007)

New Copyright Legislation (PRO-IP Act)

• Text of PRO-IP Act as passed by the Senate
• “Congress Passes PRO-IP Act, but Bush May Veto”
• “Intellectual property bill passes in the House”
• “Senate unanimously passes RIAA-backed bill”
• “Bush administration opposes RIAA-based copyright bill”

Talking Point of the Week — Banned from the Internet for Life

• EU Makes it Official: “You Can’t Randomly Ban People From the Internet”
• EFF: “The Struggles of France’s Three Strikes Law”
• EU: “Net Access is a Human Right, We’re Not Going To Take That Away”

This recording is an informational resource only. It is not designed to offer legal advice.

1. iTunes music, some video games, and a lot of other popular DRM-restricted content require authentication processes on each device that will access the content because they need to retrieve a unique encryption cipher.
2. See http://www.craphound.com/msftdrm.txt for a complete transcript of Doctorow’s talk.