Here’s a brief breakdown of the contrast between old and new media. In the old media model, each outlet attempts to be independent; an old media outlet employs a cadre of staff reporters, who write stories which are published in print and online. The new media model is in its essence interdependent and interactive; Huffington Post, and similar news sites, employ a lean staff, which does some reporting, but is dependent on the aggregation of other sources in order to be a comprehensive source of news. The centrality of aggregation for news sites like Huffington Post brings up copyright issues. How far can fair use of other news entities’ reporting go?

When the floor was opened for questions, I asked about copyright concerns that may arise from the aggregation method used by the Huffington Post. Huffington suggests that “fair use is not enough” to fully account for this phenomenon. “In a way we are still working out the rules of the road,” she said. About 30% of the Huffington Post’s content is original. The rest is gathered from other sources, many of them old media. In a recent interview with Huffington, Time suggests that the Huffington Post’s rising popularity in comparison with the news sites it sources may lead to some legal battles in the future. “Someone is going to sue the Huffington Post,” says Joshua Benton, director of the Nieman Journalism Lab at Harvard University. “It’s not just about the volume of the content that it appropriates, it’s about the value.” Old media sources are facing deep financial problems, and some may take legal action to stop losing readership for stories they report. It is unclear what the obligations of an aggregator are to the sources it aggregates.

To decrease the Huffington Post’s dependence on aggregation, the website plans to establish a fund for freelance journalists. Freelance journalists would pitch the Huffington Post stories. Having selected a freelance writer to do a story, the Huffington Post would pay for costs related to covering the story and pay the writer for the article. Huffington sees this new reporting model as a response to the rise of citizen journalism in the digital age.

Citizen journalism is considered by some observers as the beginning of the democratization of journalism. In the past, ordinary people were relegated to being mere consumers of products, including the news. Now anyone can contribute to news and reporting and actually shape their societal context. The Huffington Post’s proposed fund would take advantage of this phenomenon. Huffington brought up the case of Mayhill Fowler, a middle-aged amateur reporter who broke the story on Barack Obama’s “bitter” and “clinging to guns” statements during the Democratic primary.

Greenhouse was sympathetic to the principles behind citizen journalism, but placed several pragmatic facts on the table for consideration. Huffington mentioned that Huffington Post reporters have a decent amount of freedom to cover what interests them most, their “passions.” However, Greenhouse pointed out that, for example, in the Metro Section of the New York Times, assigning articles guarantees that everything is covered and nothing is missed. A fixed staff also guarantees a consistent supply of news because the people writing it receive consistent payment and benefit packages. Furthermore, questions from several students reflected the concern that it is difficult to verify the truth and lack of bias in citizen journalism in the absence of confirmation by a trusted news industry authority.

However, it must be observed that using freelance journalists would cut costs, while making use of the valuable skills of citizen reporters. New media sources are not exempt from the fact of limited revenues available to news sources, as society comes to expect the daily news at their fingertips for free. Huffington sees news sources, in the long run, as being “a combination of for profit and not-for profit.” The Huffington Post itself is funded by a combination of ad revenues and venture funding. Some news sites, such as Respublica are entirely not-for-profit. Traditional media sources, which employ more people and have the additional overhead cost of printing a newspaper, suffer even tougher margins. Just today, New York Times slashed wages and laid off 100 employees.

There have been several structural proposals to “save” traditional news coverage. Senator Benjamin Calder of Maryland has recently proposed a bill that would permit news outlets to choose to incorporate as nonprofits. Bruce Ackermann and Ian Ayres have proposed a national endownment for news, which would pay news outlets by the numbers of clicks that they received on their websites daily.

Huffington admits that “we cannot predict” exactly what news outlets will be like several years down the line. However, “what’s certain” is that people are used to getting news for free online, and that models that attempt to make consumers directly pay for access will not succeed. Greenhouse also acknowledged the large staff-based, subscription based model is “economically unsustainable.” She, however, warned of the danger of losing in-depth news analysis in the online quest to get stories up fast. The new media’s practices, if it is not careful, could crowd out in-depth analysis. This is an outcome that both journalists hope to avoid. “I hope, as we move forward, that there will always be a place for the journalism that you did,” Huffington told Greenhouse.

It is worthy of note that the strongest contrast between the two journalists could be found not in their positions, but in their communication styles. JE Master Laurens gave Greenhouse and Huffington the floor for a few remarks at first, then opened to questions. Greenhouse offered an account of her career and opinion on the past and future of journalism in first five minutes, and expanded on the account in her responses to questions. Huffington, by contrast, spoke little about her career or ideological positions during her initial five minutes, using her time instead to ask Greenhouse several questions about an article Greenhouse recently authored. Later on, however, Huffington responded thoughtfully and at length to questions posed by the students at the event. We learned her positions and opinions during the interactive question and answer portion of the talk. Huffington seems to thrive in terms of both imparting and receiving information in the give and take of a conversation. Their approaches, both effective, were somehow paradigmatic of the media forms they represented.

These two women, with their contrasting yet complementary styles and backgrounds, allowed the audience to understand where the news industry has come from, and where it might be headed. It seems like the old media’s dedication to reporting and thorough analysis will join with the new media’s dedication to free distribution, real time interaction, and citizen journalism. This is the only way we can develop a ‘new’ new media that is creditable, democratic, and sustainable in the digital age.

Courtesy: Matt Buchanan/Gizmodo

I am both an avid bibliophile and an unabashed gadget guy.  I had been waiting to buy the Kindle for months and bought the device minutes after Jeff Bezos announced it in New York City at a Macworld-esque event. Before my Kindle even arrived I read an article in Businessweek that made me realize that Kindle would not only change the way in which I read books, but also, thanks to the DRM, what I could do with my books.

Ever since elementary school, I would swap books with friends and lend books for extended periods of time. No one would question the permissibility of this practice, as the first-sale doctrine, enshrined into the 1976 Copyright Law (Title 17, Chapter 1, § 109)– after being upheld by the Supreme Court since 1908—which states “the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” Meaning after I buy a book, a movie, or any other copyrighted item, I can do whatever I would like with that material with the exception of duplicating it; I could sell it, lend it, trade it, rent it or even throw it out the window.

The DRM on the Kindle limits what I can do with a book after I purchase it; I can read it on my device, transfer it to another Kindle registered to me (seriously—why would anyone need multiple Kindles? Maybe if I had a family or something…), or perhaps, as of today, transfer it to my iPhone. This is it. I will not be able to do with my eBooks as I see fit. I am very much in agreement with the EFF’s opinion that “readers should not be asked to give up their first sale rights, whether their books are digital or made out of paper.”

As the readings suggest, DRM protection is a complicated issue with many arguments for and against. However, what I find particularly problematic is the way in which DRM is impinging on my freedom to invoke my first-sale rights to the books I have purchased. As Wildstrom acknowledges in his Business Week article:

The same can be said about the DRMs that protect downloaded music (where DRM seems to be dying), videos, and games. But those don’t have the same emotional effect on me that DRMed books do, probably because the trade in used books has been an important part of our culture in the way that selling used audio or video recordings has not. Our culture would certainly be much poorer without Powell’s Books in Portland, Ore., or Witherspoon Books in Princeton, N.J., or Manhattan’s Strand Bookstore.

For all of us Yalies who regularly lend or sell books—especially ridiculously priced textbooks after we have used them–the notion that we, for example, couldn’t transfer an Economics textbook purchased on the Kindle to a friend taking the course next year or exchange our copy of Freakonomics with a friend’s copy of Outliers seems unfathomable. Not to mention the fact that there are ways in which I can legally share DRMed music purchased on iTunes by burning the songs to a CD, for instance; there is no equivalent process on the Kindle.

Some probing into the End-User Licensing Agreement (EULA) for the Kindle reveals something that seriously undermines my previous claims about the first-sale doctrine. Even though I click “Buy now with 1-click” on the “Kindle Store” to purchase books, Amazon does not consider the transaction to be a sale in the traditional sense, meaning the first-sale doctrine would not apply. Instead of selling me a digital “copy” of the book, “Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times, solely on the Device or as authorized by Amazon as part of the Service and solely for your personal, non-commercial use.” Apparently, Kindle users never buy books, they just license them under a restrictive set of conditions. The EULA then stipulates, “Unless specifically indicated otherwise, you may not sell, rent, lease, distribute, broadcast, sublicense or otherwise assign any rights to the Digital Content. ”

Fortunately, Amazon’s view that purchasing an eBook merely grants consumers a license rather than ownership of a product could be challenged. Columbia University Law students quoted on Gizmodo argue, “Just because Sony or Amazon call it a license, that doesn’t make it so…That’s a factual question determined by courts…Even if a publisher calls it a license, if the transaction actually looks more like a sale, users will retain their right to resell the copy.”

While there is no case law on applicability of the first-sale doctrine to e-books, there have been cases regarding computer software, which resembles e-books in that companies claim the software is being licensed, rather than sold. In Vernor v. Autodesk Inc. (2000), the court stated that despite a claim that the software was being licensed, it was actually sold since there was no expectation that it would ever be returned; hence, the purchaser has the right do do as he sees fit with the software.  In Davidson & Associates v. Internet Gateway Inc (2004), a similar case regarding the status of software heard in the District Court for the Eastern District of Missouri, however, the Court held, “The first sale doctrine is only triggered by an actual sale. Accordingly, a copyright owner does not forfeit his right of distribution by entering into a licensing agreement.” Given the disagreement in the district courts and the fact that the digital content seems to be the way of the future, perhaps the Supreme Court will grant a writ of certiorari to one of these cases on appeal and decide the law of the land.

While EULAs may be struck down by the courts, as Proessor Lessig’s blog post earlier this week about public domain books with DRM restrictions suggests, there is nothing to indicate this would spur a change in the DRM restrictions. Since dismantling the DRM would constitute illegal circumvention under the DMCA, it would still be impossible for someone to legally invoke their first-sale rights to digital books. As we read in Lessig’s Code 2.0 earlier this semester, there are four different ways in which digital content can be protected; with respect to the Kindle, Amazon is using redundant means–both a EULA (a legal contract) and DRM (code)– to restrict the use of its content so it could still retain control in the event that one fails.

The first-sale doctrine has an additional complication when we are discussing digital content such as e-books. Wildstrom states the obvious, “Digital books don’t get dog-eared or marked up and their bindings never break, there’s no reason not to prefer a “used” e-book to a new one if its price is less.” Typically, there is price discrimination in the book market and those with can afford to pay price for their books, have a strong preference for new, crisp unmarked pages, or need a book immediately will shell out for a new copy, while others can opt to save money on a used copy in worse condition. It is difficult to imagine how publishers and authors would maintain constant revenue streams if there were no incentive to buy new books and used e-book markets on the internet featured the exact same books available on the Kindle store for much less money. As Wildstrom goes on to say publishers would have serious qualms about allowing Amazon to license their books if it could result in the loss of so much revenue. Currently, there are two major waves of book sales, for best sellers, at least—hardcover releases and paperback releases. However, if e-book readers proliferate and more and more people begin reading on devices like the Kindle, there could be a wave of people buying a book after it is released. If people could sell or transfer their books, presumably charging less money than a new eBook, people looking to buy a book for less could simply get the book from a friend or on a marketplace.

There are some solutions to this predicament. A middle ground could be reached in which limits are imposed on the number of times a book  can be transferred and transfer fees or listing fees could be assessed that would give Amazon and/or the publishers money each time a book changes hands (as “Eric” suggests in his comments on Wildstrom’s piece). Alternatively, Amazon could “rent books” for a limited time at a cheaper price point than purchased books, which could cause people looking to save money to pay for a rental instead of buying a second-hand e-book. Some software (e.g. SPSS Statistics) can be rented on a semesterly basis for students wishing to save money instead of purchasing the full version. The relative ease of renting an e-book verses purchasing an e-book from someone else could keep the flow of revenue moving even if Amazon relaxed its DMA to allow people to invoke their first-sale rights.

Speaking of the first-sale doctrine in the digital age, the Freakonomics blog on the New York Times website featured Questions and Answers with Professor Lessig the other day. In response to a question about the first-sale doctrine, Lessig said:

The First Sale Doctrine represents an important principle forgotten by copyright extremists — that copyright “protection has never,” as Justice Stevens put it in the Sony Betamax case, “accorded the copyright owner complete control over all possible uses of his work.” But in my view, to restrike a proper balance in the digital age, we need to move away from an architecture of copyright law that triggers regulation upon the copy. Instead, copyright law needs to focus on the economically relevant acts that need to be regulated to create the incentives copyright law should produce — and not on the (impossible, self-defeating, and absurd) objective of regulating every time a computer “copies” a work.”

Then question then becomes, what are these economically relevant acts?

Your thoughts?

First, let’s think about why it is difficult to figure out a price for music files. The current price for a music file on the distribution sites carrying tracks owned by the major record labels is $0.89-$0.99 (amazon.com, itunes). The continuing use of free, peer-to-peer file sharing networks to download copyrighted music is a testament to the fact that many music listeners think that the per file cost of music is too high. Copyright holders respond by attempting to stop users from using free P2P clients, through direct litigation against free P2P client sources and individual users. This political and legal battle goes on outside of the direct market for music, which limits the effect it can have on market price.

However, in modifying music user expectations, the presence of P2P clients has directly influenced the development of for profit music distribution models. Music users know music can be distributed for free, so they won’t accept high prices. Music users also have higher expectations for quality, and they reflect those expectations with their purchase patterns. Music user quality and price expectations were doubtless responsible for itunes’ recent decision to offer DRM-free files and to change its price structure.

The most successful alternative distribution models will incorporate what users found appealing about P2P clients, affordability and community, while compensating artists. Many admitted users of P2P filesharing networks admit that artists ought be compensated for music files, but argue that paid distribution options are inflexible, overpriced, as well as inferior to the best P2P clients. There is no lack of support for a business model that compensates artists at a reasonable market price. Nearly 70% of respondents to an online Wired survey claim they would pay $10 for unlimited music downloading every month. It is likely that many will resist purchasing music until a reasonably priced model emerges.

Let’s take a look at the alternatives to itunes/amazon model. The online music distribution business has a veritable graveyard of storefronts that did not work out, so the true test of these models is how well they stand the test of time. Here are three interesting models available or soon to come at this point.

• Rhapsody: Rhapsody has been offering unlimited streaming of its library since 2002. Rhapsody offers two subscription services. Rhapsody Unlimited, $12.99/month, allows unlimited streaming of music from the Rhapsody catalogue. Rhapsody To Go, $14.99 per month, also allows unlimited access to Rhapsody’s library, plus songs can be transferred to compatible PlaysForSure portable devices without purchase. While this service enables unlimited access to a large library, which includes tracks copyrighted by the major record labels, the user is seriously constrained by the limited options as to what she can do with this library due to compatibility limitations. Rhapsody is less popular than amazon and itunes, which illustrates its limitations. It seems many people who pay for music would rather have flexible access to fewer songs than unlimited, inflexible access to many songs.

• eMusic: A monthly subscription to eMusic costs $10 for 30 tracks. At $0.33 a track, it’s significantly cheaper than itunes and amazon.com. Its catalogue is also DRM free, and compatible with all media players. eMusic lacks contracts with the major labels, so the selection is limited accordingly. eMusic caters to individuals who purchase indie and underground music. eMusic also has a thriving user community, complete with its own wiki. Without cooperation from the major record labels, eMusic will likely remain a niche player in online music distribution, at least in the short run.
• Choruss: Choruss is a forthcoming online music library for undergraduate college students. Having Choruss would enable students to download unlimited music for free using whatever methods they choose. Universities would track the music downloaded, and pay the music companies for the student downloads. Universities would incorporate the charge for this service into tuition. However, it is unclear why such an option should be limited to college students. Furthermore, paying for and operating such a service is not necessarily a proper use of a university’s time and resources. The tax on students who do not wish to download a large amount of music, or wish to pay only for the music they do want, also seems unfair.

Paying per file is impractical for users who download a significant amount of music each month. A monetized model that avoids per-file payment is ideal for such power users. Choruss is most indicative of the recent movement towards figuring out methods to monetize the flow of music files over the internet while avoiding per file payment. Choruss would allow college music users to maintain their current behaviors, while allowing artists and record labels to get paid. If Choruss is successful, similar models could be tried for the general public. Warner Music has advocated an ISP surcharge for the ability to download unlimited music, as well as a surcharge on internet access.

This brings us back to the question we began with, in slightly altered form. How much should be paid for unlimited access to flexible music files, and to whom? What entity will play the role of the tracker and payer, if not the record labels themselves? Some, notably William Fisher, have proposed that government step in as the central music tracker and payer. The government, according to Fisher, should step in because this is a situation of market failure; music files have too many of the attributes of public goods to be priced and allocated efficiently without government intervention. But it seems inappropriate for a single government to take that role, placing the burden of paying all artists on the shoulders of a single nation of taxpayers. Furthermore, a centralized authority also would have less incentive and ability to listen to the wisdom of crowds in terms of pricing and execution than a firm in a competitive context.

The passion and ingenuity of music users has caused drastic changes in the price and distribution tactics employed by music distributors. I will continue to keep an eye on the development of Choruss, eMusic, and other paid music alternatives to Amazon and itunes. While they don’t have huge market share right now, they offer clues about where music distribution is headed.