As many readers will know, I've written a fair amount about the myths associated with file sharing and music sales. My writing has focused on the growth of DVDs and video games, changes to the retail channel, and the compensation earned through the private copying levy to demonstrate the losses to Canadian artists are minimal and, to the extent they exist, have very little to do with P2P.
A UK study released yesterday, along with a recent Rolling Stone article, expose two additional myths. The UK study finds that music file sharers buy nearly five times more music from services such as iTunes than do non-file sharers. This should not come as a surprise. Many file sharers use P2P to sample music and exposure to new music will result in increased sales. Moreover, this points to the fact that the music industry's policy of suing file sharers is incredibly foolish, since they are in fact suing their best customers. Years ago radio was viewed as an important promotional channel for the industry (indeed the radio industry argued that it should not pay royalties to performers since their promotion would result in increased sales). With Statistics Canada reporting that radio audiences are on the decline, P2P is increasingly the best mechanism to promote music.
The Rolling Stone article notes the decline in sales in 2005 along with the impressive success of the commercial download market led by Apple iTunes.
There are two noteworthy passages in the article. First, it affirms that there are the multiple reasons for music sales declines including the popularity of DVDs and video games and the changing retail landscape now dominated by the likes of Wal-Mart and Best Buy, who stock a fraction of the number of titles found in a typical record store. Coming on the heels of the recent OECD study and other work in this area, it is encouraging to see that the media is beginning to question claims that there is a direct correlation between P2P and music sales.
Second, the article indicates that not all record labels are having a bad year. For example, Universal Music Group's CEO and Chairman is quoted as saying that "last year was one of our best, and this year we're well ahead." In fact, sales at Universal this year are up by 10 percent. The story is not as good at Universal's competitors, who are apparently slumping this year.
I think this difference is important. If you follow the recording industry logic of P2P harming music sales, then perhaps you also think that file sharers have suddenly decided to avoid sharing Universal artists. Clearly that is not happening. Rather, this development reflects the move toward a hits-based industry where each label identifies its best commercial prospects and throws the bulk its marketing budget and efforts toward sales of a select few artists. Sometimes that works (ie. Universal this year) and sometimes it doesn't. Regardless, it illustrates just how far removed file sharing is from the commercial success of the labels since success is dictated by the consumer response to a few artists, not by the P2P red herring.
Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareWednesday July 27, 2005 |
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Much like the recent Harry Potter injunction, the story of Telus blocking access to a website gets worse the more you think about it. As I noted when the story first broke on Sunday, blocking a million Internet users from a website is not only ineffective, it is dangerous as it sets a terrible precedent and may ultimately do great damage to the ISP community in Canada.
There is even more to the story, however. Telus claims that they have the right to block subscriber access to this site based on their user agreement. In other words, they are using private contracts to support the censorship of a perfectly lawful website (as far as I am aware, no court has concluded otherwise). While this may be true (though I have not examined the Telus user agreement, I'll take them at their word), what does the law say about this?
Consider two . the Telecommunications Act and the Canadian Charter of Rights and Freedoms.
The Telecommunications Act contains at least two provisions that appear relevant. Section 27(2) provides that "No Canadian carrier shall, in relation to the provision of a telecommunications service or the charging of a rate for it, unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage." It seems to me that a compelling case could be made that Telus is unjustly discriminating against this particular website, which puts the site at a disadvantage. In fact, Telus argued that this is precisely what the provision does during the CRTC's VoIP hearings. As part of the CRTC analysis on whether it should prohibit packet preferencing, it notes that Telus argued against a prohibition, submitting to the CRTC that it "retained the subsection 27(2) prohibition on unjust discrimination." Moreover, Telus "submitted that it had committed not to do anything to deliberately degrade the service experienced by an end-user of any access-independent VoIP service."
Section 36 is even more on point. It provides that "except where the Commission approves otherwise, a Canadian carrier shall not control the content or influence the meaning or purpose of telecommunications carried by it for the public." This appears to directly address the current situation as Telus is in fact controlling the content carried by it for the public.
Once again, Telus has argued precisely this point. In its submission to the government on copyright policy in 2001, the company relied on section 36 to support the notion that there should be limited liability for ISPs since they act as intermediaries with no control or influence over the content that runs on their systems. Indeed, their submission explained that "an ISP does not initiate the transmission of information; nor does it select the recipients of the transmission, nor does it select, control, influence or modify the information contained in the transmission."
Not only does the Telus action seemingly contradict the terms and spirit of the Telecommunications Act, but it also runs contrary to the Charter of Rights and Freedoms. Although Telus is a private company, surely all companies whether private or public ought to respect the fundamental principles of the Charter. Section 2(b) of the Charter provides that everyone has "freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication." The Supreme Court of Canada ruled in Ford v. Attorney General (Quebec) that freedom of expression extends beyond the speaker to the listener, who also has an interest in freedom of expression. So too here: the website enjoys freedom of expression as do the million Telus customers who may want to read this particular expression.
This is not to say that there are not limits on freedom of expression nor on the rights of this particular website. If there is unlawful content on the site and a court orders it taken down, the host ISP must take it down. But that is not what has happened here. No court has ordered the site taken down. Rather, a single ISP, which happens to be the second largest telecommunications company in Canada, has seen fit to play judge and jury by blocking the site. That is just wrong. Telus may be involved in a contentious labour dispute, but that cannot justify this action. Unless there is an untold side to this story, the company should acknowledge its mistake and lift the blockage immediately.
Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareWednesday July 27, 2005 |
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Yesterday I noted that the Supreme Court of Canada will release its decision on whether it will hear the private copying appeal on Thursday. Today comes news that on Friday the SCC will issue its decision in R. v. Hamilton. The case involves the counselling of crime provision in the Criminal Code. The Internet dimension comes from the fact that the counselling in question was contained in spam messages promoting bomb making guides. Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareTuesday July 26, 2005 |
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Former Supreme Court justice Gerard Vincent LaForest was appointed today to study the prospect of combining the Information Commissioner and the Privacy Commissioner into a single office. Although that approach is used in many provinces, given the frustration experienced by the Information Commissioner in obtaining compliance (and an extension in his term) and the Privacy Commmissioner's inadequate resources and powers, it is difficult to see how combining the two mandates would do anything other than exacerbate the current problems. Former Justice LaForest is due to deliver his recommendations by November 2005. Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareMonday July 25, 2005 |
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The Supreme Court of Canada today announced that it will release its leave to appeal decision in the private copying case on Thursday morning. The case generated significant attention last December when the Federal Court of Appeal upheld the legality of the private copying system but struck down its application to MP3 players such as the Apple iPod. Both sides in the case (which includes the collective, major retailers such as Wal-Mart, and equipment makers such as Apple) asked the Supreme Court to hear an appeal. Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareMonday July 25, 2005 |
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This morning Statistics Canada released interesting data on the Canadian movie distribution business. The data confirms what is likely obvious to most people: the industry has never done better despite the fact that movie attendance is experiencing a sharp decline. The reason of course is the emergence of the DVD and home theatre market. People are still watching movies, but they're doing so from the comfort of their own homes.
The data makes for a very interesting case study in how technology is changing longstanding habits. Using data from 2003/4, the industry increased its revenues by nearly five percent and its profit margins by 22 percent. Meanwhile, earnings from movie theatres declined by more than 17 percent. The savior is the DVD market, which did not even exist four years earlier. During this data period, pre-recorded movies accounted for 53 percent of total revenue, with DVDs constituting more than three-quarters of that revenue.
As an aside, the data also illustrates the impact of Canadian content requirements. Canadian content films did better in 2003/4, due largely to some successes in Quebec. As an overall percentage, however, they still only garnered 4 percent of theatre revenue and 2.4 percent of DVD revenue. Where Canadian content is mandated by regulation, namely on conventional and pay television, the numbers are dramatically different. Canadian content revenues grab 24 percent of pay television revenues and 17 percent of conventional television revenues.
Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareMonday July 25, 2005 |
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Last week I blogged about a dispute over whether Canada Post would continue a 66-year old program that offer libraries greatly reduced pricing for inter-library loans. I wondered aloud why the government does not recognize the opportunity for the Internet to facilitate similar low cost distribution.
The real space issue has apparently been resolved. National Revenue Minister John MacCallum, the Minister responsible for Canada Post, now says that the program will continue stating that "the library book rate is a tremendous tool that helps us achieve some of our most fundamental public policy objectives...a strong literacy rate and low-cost information sharing will be critical as Canada continues to position itself as a world leader in the knowledge-based economy."
Of course, substitute the words "library book rate" with "Internet" and the statement works equally well. Sadly, the government has effectively said that it needs further consultation before it is willing to make that statement.
Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareMonday July 25, 2005 |
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My weekly Law Bytes column (freely available hyperlinked version, Toronto Star version) examines last week's Privacy Commissioner of Canada finding on secondary marketing. The Commissioner ruled that the inclusion of marketing materials in banking statements constitutes "secondary marketing" and that consumers should be entitled to opt-out of receiving it. I argue that the decision is part of a series of recent findings that send a clear message to Canadian business: a commitment to privacy will occasionally mean that longstanding practices must be changed.
Criticism of the finding has centered on two issues. Some fear that consumers will ultimately bear the cost of the decision with higher banking fees, while other experts maintain that scarce privacy resources should be directed toward bigger issues such as identity theft or workplace surveillance.
Canadians can certainly identify with ever-increasing bank fees, however, the cost of privacy compliance is not unique to this case. Privacy compliance invariably involves a cost, yet support for private sector privacy legislation demonstrates that it is a price Canadians are prepared to pay. Moreover, given the competitive banking environment and the fact that several banks already permit consumer opt-outs, it seems unlikely that consumers will shoulder a significant new cost.
Critics that also argue that Canada faces bigger privacy issues than secondary marketing can certainly make a case that identity theft and workplace surveillance are important issues that should not be ignored.
It does not follow, however, that the Commissioner should avoid also highlighting issues such as secondary marketing. The Commissioner is legally obligated to address all complaints filed with her office and therefore must take on cases both big and small.
Even if an investigation would not have been required, the sum of this case is much bigger than its individual parts. The effect for each individual banking customer is limited, yet there is a significant aggregate impact when spread over millions of Canadians. If the Commissioner were to avoid small privacy issues, invasive practices would be left unchecked with everyone bearing part of the burden.
Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareMonday July 25, 2005 |
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Bill C-60, Canada's copyright reform bill, can be a challenge to read since it adds some provisions to the current Copyright Act, while amending or repealing others. Many thanks to a blog reader who has worked to develop a complete Copyright Act as it would appear if Bill C-60 were to be adopted in its current form. I've also added some links for easier access to the key substantive changes. Comments and/or corrections welcome (we're working on some spacing issues, particularly for the Mac). Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareSunday July 24, 2005 |
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Reports today indicate that Telus is currently blocking access to Voices for Change, a website run by the Telecommunications Workers Union. The company has confirmed that its nearly one million subscribers are blocked from accessing the site, though it is obviously available to just about everyone else (and presumably to Telus subscribers that engage in some creative Internet surfing). The company argues that the site contains confidential proprietary information and that photographs on the site raise privacy and security issues for certain of its employees.
I can't comment on the contents of the site. Unless the site features content that is unlawful (as found by a Canadian court), however, Telus should not be coming anywhere near blocking access. Internet service providers have long argued (Telus being among the most vocal) that they should be treated much like common carriers with no discrimination or distinction between the bits transferred on their networks. I've previously argued that packet preferencing for VoIP is a growing concern. Content specific blocking is an entirely different and even more troubling matter. ISPs have persuaded the Supreme Court of Canada, Canadian policy makers, and government officials that the content blocking, whether copyright or child pornography related, is out of their control and bad policy.
To block a specific website that leaves the company uncomfortable is more than just bad policy as well as completely ineffective. It is dangerous. Dangerous for free speech in this country, dangerous for those who believe that the law, not private parties, should determine what remains accessible on ISP networks, and dangerous for the ISPs themselves, who risk seeing this blow up in their face as part of the ongoing telecommunications policy review that is considering the appropriate regulatory framework for those same ISPs.
Slashdot, Digg, Del.icio.us, Newsfeeder, Reddit, StumbleUpon, TwitterTagsShareSunday July 24, 2005 |
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