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Virtual Policy ’08: A conference on innovation and governance in virtual worlds…

July 27, 2008 Leave a comment

…which took place last week was very much focused on the “global virtual worlds sited in a European legal and regulatory context”. It explored a lot of the complex issues and potentially unfathomable consequences of virtual worlds and their relationships with governance mechanisms. And about time too, I think.

The two day event was organised by: the Virtual Policy Network (tVPN), the Department of Business Enterprise and Regulatory Reform (BERR) and The UK Intellectual Property Office (UK IPO), and it covered key policy themes like: Intellectual property rights, Financial transactions, Children online & education and Governance frameworks & innovation. As perhaps befitting an event of this nature, there was live coverage of it all on Second Life, and below is a short summary of the sessions I attended:

Intellectual Property Panel Session

This session addressed the following:

  • The use / abuse of copyright material in virtual world (e.g. vast potential for infringement of copyright / ancillary rights / design rights via various ‘in world’ activities like the use of characters from Star Wars or the content of video walls)
  • The collision of IP rights versus contractual rights in examples like Bragg versus Linden lab (creators of second life) or MDY versus Blizzard (owners of World of Warcraft)
  • What are the real user’s rights in the virtual environment (avatars do not have any rights)?
  • The implications of platform termination by operators – (even if users own the IP rights to their creation, the platforms / operators could still shut their services and render these creations unusable)
  • Impersonation and infringement of personality rights (i.e. the vexed question and cases of celebrity impersonation e.g. Lady Kier versus Sega or Oliver Kahn versus Electronic Arts)
  • IP laws in virtual worlds (i.e. the need to re-design IP laws, some of which are inadequate to deal with the virtual world, e.g. implications of trademark on virtual assets which, it could be argued, are neither goods nor services)
  • The contracts signed by users to create IP based content (or licensing schemes for User Generated Content which include: Closed Licensing e.g. Home,  Potential Overlap e.g. City of Heroes, Semi Open Licensing e.g. World of Warcraft, UGC Licensing e.g. Microsoft’s game content usage license, and Open Licensing – e.g. Second Life)
  • There was the suggestion for new licensing provision for Fan Art or Fan Applications which are not catered for under current copyright regimes.

Intellectual Property Closed Door Session

The main objective of this closed door session, held under the Chatham House Rule, was to discuss the issues faced by IP in the virtual world, and the levers and next best steps to address them. The outcome of this session would go into an IGF (Internet Governance Forum) whitepaper for presentation at the next conference in Hyderabad in December. Major points raised include:

  • The existence of implicit DRM (or DRM like capabilities) in the very fabric of virtual worlds.
  • Issues with operator liability for content infringement by their users (similar to the proposed 3 strikes rule for ISPs)
  • Regulatory assumption that the virtual world can be treated like an actual ‘place’, (and issues with this assumption, given the current difficulties faced by the content industry in translating traditional geographic / territorial restrictions into the digital domain)
  • The risk that heavy handed legislation could end up driving users and their innovations deeper underground
  • The consensus for adopting broad brush legislation alongside more rapid and iterative “codes of best practice” that could keep up with the rapid pace of technology change.

Finance Panel Session

This session discussed the idea of virtual world currencies which are described below according to their relationship with a real world currency:

  • Neither exchangeable nor redeemable currencies – e.g. World of Warcraft’s Gold
  • Exchangeable bit not redeemable – e.g. Second Life’s Linden Dollars
  • Exchangeable and redeemable – e.g. Entropia Universe’s Project Entropia Dollar (PED)

The speakers also talked about: issues with virtual currencies (e.g. banking, securitisation and taxation); the characteristics of “in world” money; as well as fraudulent practices with respect to any saleable item of value (e.g. currencies, in world items, game levels, characters or property)

PS. I also got a brief demo of a 3D platform (Forterra’s OLIVE platform) that can be used, by customers, (e.g. emergency services, government or companies), to create their own private or public virtual world.

In conclusion, the sessions I attended were rich with content, and the speakers were very knowledgeable about their topics. However, this event could only be deemed truly successful if, in my opinion, the outcome helps to create a situation where all relevant stakeholders are equally involved in the creation of any future governance policies.

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Note: This post was previously published on my BCS DRM Blog, where you can find the original post, and reader comments, in the archives.

 

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DRM at the Olympics and other possible signs of progress

July 18, 2008 Leave a comment

Certain unrelated recent developments (e.g. DRM at the Olympics, Ad-supported Pirate Videos, and potential ISP Music Download services) appear to show, what might be described as, positive progress towards embracing the evolving digital content economy. Hope springs eternal.

These notable developments, in three continents no less, include:

USA: Media Companies choose to profit from pirated YouTube Video Clips. The title says it all, and the article, from the New York Times, demonstrates how some major content companies are trying to explore other ways of making advertising lemonade from copyright infringement lemons.

UK: Possible ISP backed Flat Fee Music Deal. Although this appears to have turned into a damp squib, (albeit with publicity upside for the likes of PlayLouder and Virgin Broadband), the fact that the proposition of a flat-fee, all-you-can-eat, P2P based music sharing service supported by a major ISP could gain so much traction / buzz in the blogosphere effectively demonstrates a potential opportunity, worthy of further exploration, for the music labels and ISPs (off the back of their recent agreement).

China: Free Music / Protect Video – Perhaps as befitting a nation with the world’s eyes on it, there are two developments worthy of mention here:

  1. Google launches free music download service in China – This was announced in February, and will enable Google users in China to search and download DRM-free songs. Although the advert based revenue is to be split between Google / the music labels / hosting service provider, some analysts still wonder if the major music labels ought to be worried.
  2. DRM at the Beijing Olympics. According to this recent DRMWatch article, China’s CCTV has chosen SafeNet’s OMA 2.0 DRM for protecting Internet video coverage of the Beijing Olympics. Ok, so there’s that dreaded three letter acronym again, but this is arguably a good example of the appropriate use of DRM technology for valuable, time sensitive, content.

In conclusion, the above are just some examples of steady progress towards embracing the changes, challenges and opportunities offered by the evolving digital content landscape. Who knows, perhaps tomorrow there might even be a severe outbreak of world peace. As said before, hope springs internal (sic).

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Note: This post was previously published on my BCS DRM Blog, where you can find the original post, and reader comments, in the archives.

What Next For Music Retail?

July 15, 2008 Leave a comment

Given the current woeful state of the record industry, this is a key question guaranteed to get some interest / reaction from the industry stakeholders, and other attendees, at the Music Ally event of the same name which was held on Monday in Central London. So read on for some startling revelations. No really, read on...

The event was organised by Music:)Ally, a digital music information and research outfit, and was sponsored / hosted by Deloitte. The speaker line up included representatives from HMV, Omnifone and consultants from Conchango and Deloitte, as well an independent music business consultant. This event was done in the usual format of the moderator’s questions to the speakers; an open floor Q&A session followed by a post event networking session. Key messages and observations from the event include the following:

  • Music Ally Survey Findings – This survey of senior record industry people revealed, among other things, that: Album sales may well see a single digit percentage drop for next year, and that album prices could likely be down to £5 on average by 2012. Furthermore, the perception of the industry is that people will buy more music if it is easy to acquire (e.g. as soon as I hear what I like), and if it is cheaper in price and playable on multiple devices. Also that more “good” music would definitely be appreciated by the consumers
  • Better packaging – A potential strategy for music retailers would be for them to find better ways to tap into the emotional connection people have with their music in general, and physical products in particular, perhaps by packaging up special editions and/or increasing the use of the USB album format to shift digital copies
  • Adoption of ‘invisible’ models of music subscription – It was felt that digital music may not do so well if/when marketed as a commodity, and that there may be good opportunities to bundle it, so it appears to be free, as part of a subscription package (e.g. alongside TV, Telephony and Internet Access)
  • Issues with bundling – The push back on the above ‘invisible’ subscription model, came from a major music label attendee who felt that ISPs already had enough on their plate dealing with cut throat competition on price, (and operating on very tight margins), and therefore are very much unlikely to want to do anything that might add to this pressure. Unfortunately this does not help the major music labels which are still left badly in need of intelligent propositions for new business models to sell their music (preferably in the album format)
  • Dynamic pricing models – This touched on the potential for established digital music stores, such as iTunes, to exploit the long tail (i.e. old / niche music catalogues) with variable and cheaper pricing models to create a lucrative aftermarket. However, it was observed by a panellist that even this would also present its own challenges around what price to charge per song, track or album, and perhaps more importantly, how to value the old catalogues.

Overall these, and most other points on the night, simply served to emphasise the need for “something that works” for music retail, as soon as possible. Also it did not address a key question around what, if anything, can be done to evolve the current copyright / licensing regimes to better serve the needs of an emerging digital music business, or indeed the digital content industry as a whole. As ever, please feel free to add any thoughts / comments you may on this one too.

Copyfright system is set to die a horrible digital death…

July 3, 2008 Leave a comment

And aviator pigs will do a fly-by at the funeral. In this brave new digital world, many frustrated content owners have resorted to using copyright law as a club with which to beat up both professional content pirates and other, perhaps less criminal, users of such potential weapons-of-mass-infringement as broadband Internet, Web 2.0 applications, and certain file sharing networks. Surely the time has come to update this system globally, but where to start?

The increasingly strident calls to evolve existing copyright laws into something better suited to handle the emerging digital content economy has so far only managed to produce what seems an agonisingly slo-o-o-ow reaction and response from incumbent IP law makers, governments and creative industry players. This state of affairs cannot continue indefinitely, especially as the need for more capable digital copyright system and laws becomes even more apparent. This is easily illustrated in a recent DRMWatch article about the Associated Press’s use of text fingerprinting technology to identify and threaten bloggers; or by the recent court order to produce all YouTube User Histories in the ongoing Viacom vs. Google billion dollar law suite. In order to make significant and lasting change to the global copyright system’s ability to cope with the emerging digital content economy, certain key facts / principles must be taken into consideration as follows:

  1. Digital content is held in bits AND copyright does not apply individual bits – Yes we all know that copyright applies to the replication and distribution of creative works, but it also originated in a predominantly analogue world; therefore a digital version of copyright may be best applied to the experience of content and not necessarily to the carriage or container of that content, as in yesterday’s analogue world. A concrete example of this sort of thinking may be found in the Owner Free Filesystem (OFF), a distributed file system which stores content data in randomised blocks across a network known as a brightnet. This effectively decouples ‘content’ from its storage and transmission medium.
  2. In much the same vain, consumers cannot “own” content bits but they may own the player device – Consumers need to understand that bought digital content is not the same as thing as analogue or physical content. We need to be more aware that all digital content is ultimately at the mercy of its associated storage, transmission and rendering mechanism (i.e. failure of which may render the content inaccessible or unusable). This supports the view that, in its digital state, all content is ephemeral; therefore new digital copyright laws / systems may be better served in addressing the human–digital interface. Perhaps the push for blanket levies on devices could be the way to go after all, but only if there is an effective way to ensure it is both fair, (which may require transparent usage monitoring), and equitable for all players in the digital content value chain.
  3. Finally, all efforts to evolve a more suitable digital copyright system must think global – After all we inhabit just the one world, and the Internet transcends traditional geo-political boundaries. In fact, there really are no such things as virtual worlds, third world, middle earth, or any other artificially created worlds out there, and this is quite a hard lesson for the old school content economy to stomach given the key role played by geographical territories in the structure and nature of existing rights and licensing models. However, this looks all set to change as we continue to witness the declining use of technologies like DRM to impose and uphold restrictive models of old (the latest example, as reported in the Register, involves Real Rhapsody’s music without limits).

In summary, it is unlikely that a suitable digital copyright system will evolve without a fundamental shift in perception by all stakeholders, but the signs are becoming clearer that the time has got to be sooner rather than later. Your comments, suggestions and criticisms on this one are most welcome.

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Note: This post was previously published on my BCS DRM Blog, where you can find the original post, and reader comments, in the archives.