There is no sadder commentary on the conflict between the orderly modern world and the wild west of the Web than the legal moves the owners of the popular game Scrabble to control the game’s brand on Facebook. For those not familiar with the case, two brothers from India, Rajat and Jayant Agarwalla, created a Facebook application called Scrabulous when Facebook opened its platform to developers earlier this year. The interactive game, which, to be kind, “borrowed heavily” from the Scrabble game, quickly became one of the most popular Facebook add-ons. Hasbro, the owner of North American rights for Scrabble, sent its attorneys into action, and Facebook removed the application in the U.S. and Canada.

Mattel owns the rights beyond North America, and it quickly dispatched its lawyers into the fray. Facebook complied in all places except India, where the issue is being considered in the courts thanks to a lawsuit filed by Mattel. Hasbro has moved to create their own Facebook application for Scrabble through Electronic Arts to fill the void left by the loss of Scrabulous. The Agarwalla brothers are asking former Scrabulous players to move to another application of theirs called Wordscraper. It’s 21st Century drama all the way.

We’ll likely never learn the amount of money Hasbro and Mattel have spent on legal fees to protect their property, but it can’t be insignificant. And one has to wonder if there might have been a better way for them to respond, like perhaps just buying the application.

That’s what online movie social networking site Flixster has done in acquiring Carnegie Mellon University student Jeffrey Grossman’s iPhone application that lets users find show times, watch trailers and get maps to local theaters. It has been downloaded 250,000 times. According to TechCrunch, Grossman is joining Flixster as a consultant, a nice resume bump for a college sophomore.

I know the Flixster example isn’t the same as the Hasbro/Mattel conundrum, but on the Web, institutional businesses face the law of unintended consequences like no other marketplace before. The Facebook community is far more likely to support the Agarwalla brothers than the “big, bad corporations” that own the rights to Scrabble, and the memory of what’s taking place there will not be quickly forgotten. Before it was shut down, Scrabulous was averaging over 500,000 DAILY players, and that audience was growing rapidly. Will Hasbro and Mattel ever reach such a level with their own versions, and if they do, how much will it cost them?

This is the same brush that’s painting the record industry’s decision to sue its customers rather than let them share music they had purchased. Legal rights may protect your property, but it may actually be wiser not to press those rights in some circumstances. Hasbro and Mattel will win the legal battle and lose the war of brand contentment, and this lesson applies to anybody with a legacy business that’s trying to move its brand to the Web.

Oh, and Scrabulous is still available here, at least for now.

(Originally posted on AR&D’s Media 2.0 Intel newsletter)

The AP has settled its case with The Drudge Retort and issued a remarkably vague statement about it this morning. Rogers Cadenhead, who runs The Drudge Retrort, writes that we’re headed for a Napster-like showdown in the matter. We won’t know until AP issues the “guidelines” it promised on Monday.

If AP’s guidelines end up like the ones they shared with me, we’re headed for a Napster-style battle on the issue of fair use…

…As a newspaper reader since age 8 and the spouse of an investigative reporter, I want the media to keep making enough money to afford the expensive and essential practice of journalism. I sure as hell don’t want to do all that reporting myself.

If AP’s core business is to report the news, blogs and social news sites send millions of people to its articles every day. Retort users have posted 41,000 links to news stories in the last four years, each link sending from 1,000 to 5,000 readers directly to a media site to read the article.

If its core business is to repackage the news, they’re in as much trouble as every other middleman on the web.

This is far from over, and I think the representatives of the citizen media movement are far better equipped to handle a big legal case than was Napster during its confrontation with the record industry. I’ll have more to say on this later.

IMPORTANT UPDATE: Robert Cox offers the real back story. Fascinating.

Mark Cuban is his usual out-of-focus self with a post (Hulu is kicking Youtube’s ass) declaring Hulu the winner over YouTube. The problem, of course, is that these two companies are not now and have never been in competition, although Cuban thinks otherwise. To Mark, YouTube has always been about the theft of copyrighted material, so he never really bothers to examine what makes it hum.

It’s all about the money to Mark. A media business can only exist if its revenue model is built around scarce content, so he proclaims Hulu king and makes a prediction:

…by next year, not only will Hulu have more monetizable traffic than Youtube, but it will have more total revenues than Youtube as well. It wouldn’t sup rise (sic) me if they are already at a higher annual run rate than Youtube.

Here’s the thing. Mark’s probably right, but in thinking of YouTube only in sustainable business model terms, he misses the larger picture and continues to prove himself ignorant about the Web. Sometimes there are legitimate reasons to do things contrary to the P&Ls of the past, if they work towards a longer term return (why doesn’t Google sell ads on its home page?). He has always viewed YouTube through biased eyes (those damned thieves), and for a smart guy, he sure comes up short here.

“Youtube hides behind the Digital Millennium Copyright Act,” he writes, as if its reason for being is to steal copyrighted material and profit from it. If it looks like a red herring and smells like a red herring, then it’s probably a red herring.

YouTube is about sharing, people sharing what they see and what they make, things we’ve been doing since before the term “media” referred only to the home of the Medes. In the 15th Century, the Roman Church didn’t want the Bible being shared with the laity, because they felt they “owned” it. I took my 45s with me to friends’ homes back in the 50s, so that they could hear the music too. Back then, the record industry knew that exposing people to the music was the best chance they had to sell another record.

YouTube’s tentacles within the personal media revolution go on for miles, because people don’t use it to view stolen goodies. Its business model hasn’t been written yet, and those who insist on looking for one just don’t have the patience to wait. I use YouTube to post videos that I’ve made on my MySpace page. There are lots of ways I could do that, but the Flip camera and YouTube make other options seem obsolete. How does YouTube gain from that? For one thing, they keep anybody else from charging fees or profiting from interruptive commercials, and in so doing, buy time for an acceptable business model to develop.

But that’s not the point. We’re in another Gutenberg moment here and the “church,” led by priests like Cuban, want absolute control over material the law tells them they own. I don’t think anybody objects to that concept, but the more people like Cuban press the matter, the more unseemly the whole thing seems.

I love Hulu and have expressed that love before. I watch “House” via Hulu, and while I wonder why there’s such an emphasis on clips from shows instead of the shows themselves, it’s a great experience. But I go to Hulu knowing what I’m getting, just as I go to YouTube knowing what I’m getting.

They’re two different things.

The AP’s foolish blunder in trying to enforce its view of fair use is getting more and more coverage in the blogosphere, including from notable voices such as Mark Glaser, Matthew Ingram (who makes a very important point) and Duncan Riley. It’s reached the point where it can only end badly for the AP, but here’s the worst case scenario.

Most media people dismiss the blogosphere as unsubstantiated crap, but like other “worlds,” the blogosphere contains some really, really sharp minds. Those minds are tapped daily by the people with money in Silicon Valley and elsewhere. These kinds of people seize financial opportunities when presented, and the clear opportunity here is for somebody to create a new world competitor to the walled garden that is the Associated Press.

Think about it. You have newspapers in Ohio organizing to swap stories. You have the newspaper consortium, brought together by the deal with Yahoo but talking amongst themselves about other opportunities. Given the huge sums of money that member media companies pay to participate in the “cooperative,” I’d be surprised if this subject hasn’t already come up in many places.

And what happens if somebody like Craig Newmark comes along and creates the aggregator for free?

Like I said earlier, the AP’s future has always been questionable, given the disruptive nature of the Web and what it does to middle men. But by its own foolish actions with The Drudge Retort, the AP has likely accelerated that by months, if not years.

UPDATE: The Drudge Retort considers suing the AP. Stay tuned.

As if it really needed defining, right?

In an ongoing case that continues to baffle common sense, the Electronic Frontier Foundation (EFF) has refiled its suit against Universal Music Group for bullying YouTube into pulling a 29-second clip of little Holden Lenz “dancing” to background music of the Prince tune “Let’s Go Crazy.” The original suit was tossed out by Federal district court judge Jeremy Fogel in San Jose, who said the EFF hadn’t proven their claim that the clip’s fair use of the song was “self-evident.” Any sane human being could recognize that it was, so the EFF’s new case spells it out, and it’s precious:

“The video bears all the hallmarks of a family home movie–it is somewhat blurry, the sound quality is poor, it was filmed with an ordinary digital video camera, and it focuses on documenting Holden’s ‘dance moves’ against a background of normal household activity, commotion and laughter,” the new complaint charges. “The snippet of ‘Let’s Go Crazy’ that plays in the background (not dubbed as a soundtrack) of the Holden Video could not substitute for the original Prince song in any conceivable market.”

Kudos to the EFF! There’s no reply from Universal yet, and they’d be well-advised to just settle the thing, because if this makes it through the courts, it’ll become a fatal setback in their efforts to win the personal media battle through the legal system.

It was, as we say here in Texas, dumber than a bucket of hair to push this case in the first place (the video had only 29 views when Universal lawyers found it - now over 463,000), and anything from here on out just adds to the foolishness of Universal’s actions.

I spent a part of the day playing with HULU and can honestly say it’s an enjoyable experience. Whether choosing a clip from Saturday Night Live or watching an episode of House, everything about the site works really well. It was nice to watch a 44-minute episode of House in, well, 45 minutes with “limited interruption” from one sponsor (15 second ads). One wonders, of course, if that won’t change, assuming popularity increases.

One thing — and it’s a little thing, I’ll admit — really bothered me. The image below is the player during an ad. Note the language at the top that I’ve circled. In players from start-ups created in Silicon Valley, this same information is communicated with a simple countdown clock. With HULU (and one expects those from other mainstream media companies) it’s all spelled out. In my view, this is typical broadcast thinking, where the audience is too stupid to intuitively figure it out for themselves. Imagine how annoying this will be after months or years of use. Perhaps then, they’ll change it. Along the same lines, when you choose the full screen mode, the player notifies you to hit “escape” to get back to the skin. Um, does that really need saying in this day and age? Less is more.

Overall, though, this is a great site for viewing media clips. The user experience is excellent, and it could become THE go-to site for this, if only the other networks would all come aboard. Will that happen? I say eventually yes, because it makes business sense to put all of these types of programming in one place.

HULU is still in Beta with invitation-only access, but it’s expected to go public this spring.

If you’re a basketball fan in Dallas, the name Mark Cuban personifies the party that is a Dallas Mavericks game. He bought the team in 2000 with wealth acquired during the dot-com days — specifically, a company called Broadcast.com. A self-made guy from blue collar roots and a textbook entrepreneur, he worked his way up through the gold rush days of technology to where he is now — one of the richest people on the planet. His latest business venture is HDNet, the high definition cable and satellite network.

Cuban maintains an active blog and is quick to share his opinions about anything relative to his business interests, and that includes trends in media. He’s relevant and always gives good “soundbites.” He provides a consistent focus on traditional media business models from an executive’s seat, which makes the blog a fascinating and provocative view, although some would say similar to that of the captain of the Titanic. Time after time, he paints the media business disruption as one driven by thieves, shadowy denizens of the darknet out to rob him and his peers of what rightfully belongs to them. It’s astonishing that a man of Cuban’s history would take such a view, but HDNet needs the existing hegemony in place in order to fulfill its value proposition. So by way of investment, Mark Cuban, a swashbuckling maverick who sliced a path through the status quo to a lofty seat in society, now finds himself a defender of the very things that were his targets “back in the day.”.

His latest is an open letter to Comcast — and anybody else who owns the pipes in which the Internet functions — calling for them to block peer-to-peer (P2P) activity. The blog post comes off as ignorant and disingenuous, for Cuban’s objection to P2P is presented as that of a consumer, not the owner of a business potentially disrupted by P2P.

As a consumer, I want my internet experience to be as fast as possible. The last thing I want slowing my internet service down are P2P freeloaders. Thats right, P2P content distributors are nothing more than freeloaders. The only person/organization that benefits from P2P usage are those that are trying to distribute content and want to distribute it on someone else’s bandwidth dime.

Cuban is fully taken to task for this view in the comments to the post. I’ll just say that it appears on the surface to be simple ignorance, because P2P bears no resemblance whatsoever to the way it’s described here.

But Mark Cuban is a very smart fellow, and his presumption to speak on behalf of consumers is well-considered. He may go off half-cocked from time-to-time, but this “letter” is actually a defense of his investment in HDNet. It’s the same reason he writes so passionately about the disruption to the music industry, the uploading of “pirated” TV clips and the general unbundling of video. He has a pretty big dog in the fight, and instead of simply delineating how the disintermediation of media impacts his business model, his strategy is to rant and rave about how “wrong” it all is in the first place. He’s a charismatic fellow, and all of this makes him a great witness in Congressional hearings, for as HDNet’s chairman, he’s a great friend to the copyright industry’s efforts in Washington.

All of which is to say that we need to pay attention to what Mark Cuban writes but also bear in mind that it’s one side of a very two-sided story. What I appreciate most about Cuban is his willingness to give us the business side. I just wish he’d be a little more transparent about it.

UPDATE: Mark clarifies things in the comments.

Last week, popular rock band Radiohead announced that they would be by-passing the recording industry and taking their new album directly to their fans. Moreover, they shocked everybody by announcing that fans could actually name their own price. Holy mother-of-RIAA!

Now comes an even more devastating announcement from long-standing rock powerhouse Nine Inch Nails. In a post on their website yesterday, NIN announced their freedom from record companies, saying that they, too, would deal directly with their fans. There’s a ton of resentment in a statement by Nine Inch Nail’s Trent Reznor:

I have been under recording contracts for 18 years and have watched the business radically mutate to something inherently very different and it gives me great pleasure to be able to finally have a direct relationship with the audience as i see fit and appropriate.

Technology may be the enabler (or redeemer), but the energy for this comes from the people that the industry is in place to serve — both the record makers and the record buyers.

I think this is huge and has cultural ramifications far beyond music. If you are in any middleman position in the information and entertainment worlds (aggregator exception noted), your future livelihood is in jeopardy.

Gizmodo (nine inch) nails it:

If two of the biggest acts in the industry can see the digital writing on the wall and totally embrace it–that the old way of doing business is broken–why can’t the labels? What Radiohead and NIN are showing is that the business model “of the future” feared by entrenched interests isn’t arriving some time in the horizon. It’s touching down now.

The digital writing on the wall literally shouts to all media to get onboard the Cluetrain and acknowledge that an empowered citizenry is not a passive citizenry, and that J.D. Lasica’s personal media revolution is a real revolution, against the power grid that controls our lives for their profit. As I’ve written in the past, the public never wanted quality bundled with crap, which is the formula for profit from the whole copyright cartel. The cable industry, for example, will lose the bundled programming argument for the same reason, because ultimately, people will be able to pick and choose what they want.

Trent Reznor’s exclamation is nothing less than freedom from slavery, and there’s no going back.

(Seriously big hat tip to Duncan Riley at TechCrunch)

I strongly recommend you give a listen to Shelly Palmer’s latest podcast. It’s with Ray Beckerman, Esq., partner at Vandenberg & Feliu LLP, Shelly and Ray discuss the RIAA’s judgement against a Minnesota woman for uplinking 24 copyrighted songs. It’s only 16 minutes long, and it gives what I think is some very valuable insight into the whole issue of the music industry suing its customers.

Beckerman is a copyright expert, and his take is spot-on. He calls the ruling a bad interpretation of the law and believes the verdict will be set aside, primarily because the judge incorrectly instructed the jury. He adds, however, that the RIAA will rush to settle the case for next to nothing, because they need the verdict to use in other cases. It’s fascinating — and, frankly, scary — stuff.

The gallant attorneys for the RIAA have won at least a symbolic victory in their battle against music customers. The jury in the case against a Minnesota woman deliberated only for a short time before awarding the record companies over $9,000 in damages for each of the 24 songs the woman uploaded to music sharing site Kazaa. The $222,000 award won’t even pay for legal fees in the case, but that’s not the point. The RIAA won. The law rules. Don’t we all feel safer?

There are two points. One, this “victory” won’t even put a dent in people sharing music online. Two, a key ruling by the judge in the case is likely to be challenged somewhere along the line. Reporter Jeff Leeds of The New York Times called it a “hotly contested technical question,” and it was the lynchpin of the verdict itself.

…for jurors to find her liable, the record labels did not have to prove that songs on Ms. Thomas’s computer had actually been transmitted to others online. Rather, the act of making them available could be viewed as infringement, the judge ruled.

The RIAA can’t possibly be rejoicing over this, because — as the Electronic Frontier Foundation noted: “Every lawsuit makes the recording industry look more and more like King Canute, vainly trying to hold back the tide.”

We badly need copyright law to be rewritten in a way that both producers and customers can live with. Otherwise, the record industry is doomed, for suing your customers is generally not a good business practice.

How do I say it more clearly? Honestly, folks, we need better leadership than this in the seats of media power, and until that happens, we’ll just continue to miss the point, over and over and over again.

At an anti-piracy summit in Washington Wednesday, NBC’s Jeff Zucker actually called for AT&T and other Internet-service providers to install filtering software to, and get this, “weed out pirated content and unclog networks.” This is one of the most dangerous and desperate things I’ve ever heard come out of the mouth of someone who, among other things, is charged with certain responsibilities vis-a-vis the First Amendment. And the REAL PROBLEM is that this line was likely penned by the Telcos, not Zucker or his writers. I mean, come on! “Unclog networks?” Where have we heard that before?

AT&T would LOVE to filter the Web.

Tying piracy to clogged networks is simply ludicrous. The statement serves the best interests of those who want a tiered Internet, and if that happens, we can kiss innovation goodbye.

What Zucker and the other copyright crybabies want is to go back to the good old days, where money is made from the scarcity of content. And in these arguments, everybody overlooks the assumptions that support the arguments in the first place.

Here’s assumption number one: if we can control access to our copyrighted content, people will have to come to us to get it and pay whatever price we think the market will bear. And the underlying assumption of that is that our content is so great that people will follow whatever path we set for them. And, of course, another assumption is that the only value of new technology is multiple ways for us to monetize our content. It is with utter glee that Hollywood views the opportunities before them.

But along the way, something went wrong with the plan — the cash cow formerly known as the audience refused to play the game. Their refusal, however, isn’t demonstrated in stealing property — as Zucker and his friends would have us believe. People have found that they can live without it, and they’ve discovered — in significant numbers — that it’s a lot more fun to make their own stuff than to watch another episode of unoriginal original programming and a thousand commercials.

A Hollywood Reporter article about Zucker’s speech cites an air of desperation from the NBC Universal CEO:

“The unfortunate truth is that today we are losing the battle,” he said as he urged members of the Chamber to join the entertainment industry in a national effort to combat the threat.

“Our unified voices will carry far more weight than the pleas of the individual industries,” he said.

To back up his call, Zucker cited a study by the industry-friendly Institute for Policy Innovation study released Wednesday that found the impact of intellectual property piracy among all the copyright industries is nearly $60 million a year, cost about 373,000 jobs and $2.6 billion in lost tax revenue.

Perhaps in the old days we would believe such numbers, but let’s play the assumption game here again. Firstly, the “Institute for Policy Innovation” is a den of lobbyists, and in this case, you can bet they weren’t paid by the people formerly known as the audience. Hence, these numbers are simply pulled from the sky — built out of full-price scenarios and using audience estimates from God knows where.

And this whole anti-piracy message gets the attention of Congress, because copyright is our number one export. We entertain the world, so Zucker is very likely to get support from Capitol Hill.

When I was in Amman last Christmas, I wrote about street vendors selling DVDs of current movies — videos shot from a camera on a tripod in a theater. They sold them for $1.50 per DVD, and I assume these are some of the criminals that are robbing Mr. Zucker and his friends. I don’t dispute that, but think about this for a minute: Who buys these DVDs? Is it the people who could afford to go to the theater and watch the films?

The argument that, absent the DVDs, these same people will go to the theater to watch the movies is fantasy, and therein lies the rub.

Technology is blowing the whole entertainment world apart, and rather than seek creative — and profitable — solutions, the people who run the giants of the copyright cartel keep trying to pull the whole thing back under their control. They are joined by the giant Telcos, who are their allies in the command-and-control battle in Congress. If the Telcos can create a tiered Web, where only those with deep pockets get the quality bandwidth, then Zucker will have his wish. Bring on those “unclogged” pipes that are filled only with pirated property. While I’m sure he doesn’t think so, Zucker is actually a puppet in the hands of AT&T.

If a tiered Web happens, it will stymie innovation, but it won’t stop the personal media revolution. And this is the real problem that the studios don’t want to consider, because, well, anybody can produce crap.

And here’s the real kicker. The studios won’t make a dollar more than they are today. Not one single dollar.

You can take that to the bank.

From Mozilla Europe CEO Tristan Nitot via Techcrunch:

“I don’t think DRM has a future. Treating your customers like thieves is bad business practice. Today the customer is not ‘king’, they are considered thief first….It is stupid to think that the key to a DRM system won’t leak. So if it becomes more painful for a legitimate customer to use a product than it is for the pirates then that’s a problem.”

I love the pure simplicity of the concept expressed here. It’s the 30,000-foot view of all the noise about copyright, and it expresses the hopeless foolishness of all the legal maneuvering we’re reading about these days.

I’ve been saying for years that the institutions of modernism will not go quietly into the postmodern future, and this certainly includes the world of communications. I wrote long ago that we needed to watch the courts, because lawyers are the maintainers of the status quo. That is their reason for being, to keep the money in our culture where it “belongs.” Whether it’s lawyers in political office, lawyers in the private sector, or lawyers in the public sector, the mission is the same: create and uphold laws that validate the behaviors of the haves in the keeping what they’ve got.

This is, of course, problematic when the playing field is leveled by technology and when people formerly left out of the power paradigm are suddenly let in. It was this way with the California gold rush, and it’s this way today.

So we watch the courts, because that’s where the battle is really fought. Unelected governors of the culture dressed in black robes keep a lid on everything, because, well, that’s the way things are done. Where they can find no law to support mission, they often just make one up. Case law, I believe it’s called, but I digress once again.

We watch the courts, and there’s a lot to consider this week.

• Verizon doesn’t like the half-assed job that the FCC did with setting “arbitrary and capricious” rules for the 700 MHz auction, so they’ve gone to court. Verizon likes closed spectrum, because it gives them a competitive advantage. The FCC bought a part of the argument of that bad old disruptor Google, and decided to make a part of the spectrum open, meaning any device will have to be able to connect to it. Verizon may have legitimate business concerns, but going to court means they want a judge or judges to do for them what they can’t do for themselves.
• CNET news surveyed some lawyers and discovered that they’re all waiting for somebody to go to court to stop people from blocking ads online. That’s right. The “issue” is “just now ripening,” according to the Interactive Advertising Bureau (IAB). The article does point out that the courts have historically come down on the side of consumers with this issue, but the new twist here is somebody other than the consumer (Firefox) is blocking ads. Of course, Firefox is open source and built by “the people.”
• Prince, or the artist known as Prince, or whatever he calls himself these days is suing YouTube, eBay and others over what he views as copyright violations. In so doing, he joins Viacom and others in asking the guys in the black robes to help them against this great evil. Don’t misunderstand; I’m a writer, so copyright means a lot to me. But this copyright business has become the symbol for resistance against an enormous consumer backlash over price gouging and dictatorial control by an industry interested far more in profit than music. According to a Reuters article in the New York Times, Prince is thought to be the first individual artist to go this route. Lawsuits by the music industry have become common.

  Prince has apparently hired British company Web Sheriff to help him ferret out offenders.
  

  “In the last couple of weeks we have directly removed approximately 2,000 Prince videos from YouTube,” said Web Sheriff managing director John Giacobbi.

  “The problem is that one can reduce it to zero and then the next day there will be 100 or 500 or whatever. This carries on ad nauseam at Prince’s expense,” he told Reuters.

  The phrase “at Prince’s expense” is most interesting, because this is really more about a principle than real dollars lost. And what is the principle? That the courts “should” help the status quo get back to the position it used to enjoy.

These are far more complex matters than I’ve articulated here, and I suppose it would be easy for a smart lawyer to explain why I’m full of it. But if this “personal media revolution” has taught me anything, it’s that the people formerly known as the audience — the viewers, the listeners, the users, the fans — aren’t going back into the box from which they’ve escaped. I wouldn’t bet against them in any of this.

According to data provided to me by Hitwise, Viacom’s Comedy Central and MTV websites have lost market share since the company ordered YouTube to pull copyrighted videos from the popular online video aggregator in February. This despite clear statements by Viacom that YouTube was standing in the way of its ability to make money from its content on its own sites.

Viacom assumed the traditional model of scarcity would reward their strong arm tactics against YouTube, but it hasn’t, and it won’t, because Viacom — like so many other mainstream media companies — can’t see beyond the traditional economic walls that surround its empire. Abundant micro-media is killing (or already has killed) the old model, and it shows no signs of letting up. You only need to consider that while traffic to comedycentral.com has gone down 11% since February, and MTV.com has seen a 14% traffic loss, traffic to YouTube has gone up an amazing 39% during the same period.

In March, Viacom CEO Philippe Dauman told shareholders, “Our content was a substantial part of the traffic on (YouTube). We are very pleased to have more traffic on our sites since we took down our video from YouTube because we are able to monetize that as opposed to someone else doing so.” Apparently not.

Moreover — and this is truly amazing — during the same period, YouTube has been providing a steadily increasing amount of traffic to those two sites. That’s right. Upstream traffic from YouTube to comedycentral.com has increased 17% since February. Traffic from YouTube to MTV.com has gone up a whopping 38%.

So let’s accurately understand the picture. Viacom sued Google to remove copyrighted videos from YouTube, because YouTube was in the position of making money off Viacom’s content. In so doing, they assumed that people who wanted to see the various Jon Stewart (and other) clips would make their way to comedycentral.com, where they could have the same experience offered on YouTube, except with Viacom’s ads attached. From a traditional media perspective, this makes perfect sense.

However, the opposite has happened. Not only have people not gone to comedycentral.com to see the clips in numbers anywhere near YouTube’s, the site and MTV.com have lost market share since Viacom pulled the clips from YouTube. YouTube, meanwhile, continues to show explosive growth and is actually feeding Viacom’s properties with an increasing amount of traffic — all without compensation, I should add. (Where’s the quid pro quo love, Mr. Dauman?)

And without all those people swapping and emailing the Stewart clips or the Colbert clips, their influence will begin to decay as well. Out of sight, out of mind. And soon the audience for these shows will be limited to hard-core fans and nothing more.

I know this drives people nuts, but we simply cannot ignore the power of the personal media revolution in what’s taking place across the media landscape today. The Media 2.0 disruption isn’t about online brand-extension, multi-platform delivery schemes, deals with Joost, or anything else that tries to protect the Media 1.0 paradigm. And it’s not (just) about technology either.

It’s all about people — informed, empowered, enabled, involved, and connected people — people who are fleeing the relentless assault of mass marketing and building new value chains and a new media economy in the process. Involving ourselves in all of this is more than just the right thing to do; it’s an absolute necessity of doing business in the world to come.

(Edited 7/9 to reflect market share versus “traffic”)

Now that Ma Bell has been put back together, it’s wishing to reinstate itself as the dominant player it used to be. The company is trying to sneak its way to top dog status by garnering exclusive arrangements with major players like Apple, and now its involved in a new, seditious attempt to harness the web and police the behavior of its own customers.

The latest effort involving the web has stirred up a hornet’s nest of negative reaction, especially from those who wish to keep the internet free (like, everybody?). A Los Angeles Times interview with AT&T senior VP James Cicconi reveals that the company is working with movie studios and record companies to create and implement anti-piracy technologies at the network level. As Geoff duncan of Digital Trends News writes, this is a first.

The announcement…opens a host of technical, ethical, business, and consumer privacy issues the company will have to deal with even assuming it can develop the type of technology it envisions. In essence, AT&T would assume the role of “copyright cop,” deciding what content can and cannot traverse its networks.

AT&T apparently believes that by engineering a network which is “safe” from digital piracy, the company will gain an upper hand in negotiations and distribution deals with movie studios and record labels as the digital media juggernaut continues to accelerate. If AT&T can make the argument that offering digital media on its network will not contribute to digital piracy, the company may be able to leverage exclusive deals from content providers and possibly charge a premium for distributing media over its network.

Sounds all nice for corporate friends, but what about you and me? I mean, who wants their ISP snooping on their online activity, except those from the same old world of command-and-control?

Doc Searls doesn’t like it a bit, saying “AT&T, please go to hell.”

If I were an AT&T customer today, and I had any other choice of service provider, I’d drop AT&T like a bad transmission. In fact, if you’re an AT&T customer, I suggest you do exactly that. If you can.

Dave Winer has similar thoughts.

If there were a death penalty for corporations, AT&T may have just earned it.

David Weinberger’s assessment is even more pointed.

Putting a cop in the middle of the network and making available content not accessible by other networks means that if the AT&T says it’s offering Internet connectivity, it’s lying.

The Internet is a set of protocols that ensure that bits will be moved across networks (inter-networking) without giving special privileges or control to the carriers.

And Duncan Riley at TechCrunch calls AT&T “American Tracking & Takedown.”

There’s something very, very wrong when a company starts conspiring against its users. Perhaps the days of the customer being always right have passed? Certainly there will be many AT&T customers who will soon (be) looking for internet access from alternative providers

Of course, I’m in agreement with this, and I have AT&T internet experience to back it up.

AT&T is trying to build itself on the products and services of others. I suppose there’s nothing wrong with that, but they offer nothing original. They bought Cingular and now will be the exclusive dealer of iPhones for five years. That alone will keep me from buying one (and I don’t think I’m alone). I’m a Verizon guy.

My apartment complex in Grapevine, Texas has an exclusive deal with AT&T to provide phone, “cable” and internet. The cable comes from DirectTV and Verizon lines provide the DSL. DirectTV would be fine, if I had my own dish, but when the signal is spread out over hundreds of units, all kinds of little annoyances come into play. I’m also not a big fan of DSL, and I’ve had my share of problems.

AT&T “works” only when it is a monopoly, and that’s what it wants once again. Otherwise, people flee the scene like doves scrambling to get away from a Red Tailed Hawk. I’m moving in another couple of months, and the fact that my home entertainment and communications is tied to AT&T is — believe it or not — a big reason why.

I wonder how many of their “customers” are in such forced arrangements.

This is my review of Andrew Keen’s book, the cult of the amateur, how today’s internet is killing our culture. It is a whining, outrageous and defensive fantasy based on sweeping generalizations, falsehoods, paranoia and a form of condescension so pissy that it blinds the author to anything resembling reality.

Let’s get something straight up front: our culture is most certainly evolving. Hell, it’s been the subject of this blog and my writing for the past five years. I say this, because Keen represents the (wonderful) world of pragmatism, which is the epitome of the modern culture. Hence, it’s understandable that he would view the internet as killing HIS world. That said, I think the subject needs an airing, and Keen is trying to give us that. The problem is that his prose is so filled with condescension and venom that it’s nothing more than emotional weeping. And if you took all of that out of the book, it would be about ten pages long.

I’m serious when I say the book is a tough read. It’s tough, because the mind’s search for substance is always confronted by extremism, emotion and haughty disdain for anybody who doesn’t meet his professional “standards” or think as he thinks. I can’t count the number of “Holy Craps” I uttered while working my way through the pages. And I think this is a big problem for a man who’s trying to ask some legitimate questions.

Here are just a few of my objections to Keen’s form of argument:

In the very beginning of the book, he says what it is, “It’s ignorance meets egoism meets bad taste meets mob rule.” He paints the problem as pragmatism versus the pejorative “digital utopians.” Whether he’s on YouTube, MySpace, Wikipedia or another other place with a Web 2.0 tilt, he searches for the most outrageous examples to make his point.

Folks, if we’re going to have a discussion about this, we need to find some common ground on which to argue. I can show examples from each of those places that are the opposite of the riff-raff that Keen finds, so what’s the point of such extremism?

Ignorance. Egoism. Bad taste. Mob rule. In other words, these are things opposing voices wish to enable. How absurd. He’s fond of the old saw about monkeys and typewriters, often referring to those of the participatory age as such. Again, how do you argue with a man who’s calling you an ignorant, egotistic, boorish monkey? And more importantly, how does one with a reasonable mind listen to the arguments of one who uses such prose?

My biggest complaint with the book, however, is its black/white, win/lose, right/wrong, all-or-nothing perspective. In this he fails his argument and belies his own ignorance. His is the extreme view, not the views of those he labels utopians. I know many of the people he attacks in the book, and not one of them has ever expressed the cultural significance of the digital age from such an extremist stage.

Was Michael Powell being utopian when as FCC Chairman he stated that “application separation” was the single most important paradigm shift in the history of communications and that it would change things forever?

Jeff Jarvis has apparently agreed to debate Keen online, but it’s not a debate that’s winnable. Keen is so extreme, that his assumption of the middle is yanked far over to his end of the balance beam, so where is one to go to bring it back? He even throws in the sexual predator issue to support his fear mongering. What, I ask you, does that have to do with the personal media revolution? As if Keen’s love of rules and regulations has ever protected children from such.

“The cult of the amateur” is nothing more than a can of neatly stacked red herrings, and that doesn’t make for a debate at all.

A dear old friend of mine wrote this week expressing concerns similar to those stated in the book, so I want to try and discuss Keen’s central focus — that the personal media revolution will destroy Hollywood, the professional press and the advertising industry, thus collapsing our economy. To get my full take, you’d have to read everything that’s available in the archives of this website, especially the essays. I have no utopian views of the future, although I believe I have a little more faith in people than does Keen.

He believes the mainstream press and its methods for gathering and presenting the news is worth saving. This assumes that it’s dying, which it is not. It may seem like it from Keen’s perch, but just because something “could” happen doesn’t mean that it’s “going” to happen. Is the professional press worth saving? Of course, and who would argue otherwise? Its absolute grip on information, however, is not worth keeping, because today’s press is all about corporate greed and making money.

The public intuitively knows this, which is why Gallup’s annual measurement of trust in the institution of the press has been steadily sinking for decades. So the press is being reformed from without. What’s wrong with that?

Keen argues that his “cult of the amateur” is killing the copyright industry. Again, this assumes an all-or-nothing scenario, which I just don’t buy. What is under attack is Hollywood’s absolute grip on defining and nurturing the arts, because, again, it’s all about money. How is Hollywood, for example, about creativity, when the best it can do is produce sequel after sequel. Same with the publishing and music industries. The quickest path to profit is to repeat the blockbuster, but in so doing, it weakens all of the arts.

As to the economic argument, we all need to be momentarily concerned, because the copyright industry is America’s largest export. We entertain the world, which is why the industry maintains such favor on Capitol Hill. But again, this is purely a matter of big corporations who control all of entertainment in the name of profit. It has nothing to do with talent, creativity or Keen’s favorite, taste. Let me quote Powell again, “I have no problem if a venerable institution disappears tomorrow, as long as that value is distributed elsewhere in the economy.”

So it is about money, and it is about it being shifted away from institutional power to other places in the economy, namely the pockets of new power players. This may be a concern for professional institutions, but it is not a direct concern for our economy. Keen directly challenges Chris Anderson’s “Long Tail” as economic mumbo-jumbo and cites examples of bloggers along the long tail that aren’t making any money. He then uses this to make the case that advertising will collapse absent a mass marketing paradigm and that the professional press will collapse, because nobody will pay the bills.

This is hogwash. Advertising, like media, is an institution undergoing change. The road may be rough, but it is not going to collapse. And there is tremendous money to be made in the information business, although perhaps not in the manner that Keen prefers.

He views the aggregation of content as theft and evil, and he routinely insults the integrity of young people, making sweeping statements about their eyeballs being drawn to what he views as nonsense instead of traditional forms of entertainment.

I have always been concerned that forms of entertainment are our biggest export, but this is a question that’s bigger than Keen’s use of it. We really have to decide as a nation if this is truly in our best interests.

Let’s go back to the last big cultural change, the time when modernism first came on the scene. Those of the ruling elite at the time shouted similar themes, essentially that the worship of rationalism and the human mind would replace the worship of God (through the Roman church). However, modernism didn’t destroy faith; it simply helped us evolve as human beings and move our faith from that which is blind to that which is understandable. In the same way, postmodernism questions the ruling elite of today and demands that we rethink assumptions. It will no more “kill” modernist views of the press than modernism killed premodernist views of religion.

So it’s not an all-or-nothing thing, and we shouldn’t approach it with a spirit of fear.

Keen is obsessed with the idea of truth, and that the road to truth is through science and study. Professional experts, in his view, come closer to truth than those who haven’t followed that which has come before, and this explains his indignation toward anyone who might claim gifts or inherent skill or talent. This is textbook modernism.

The postmodernist, however, looks around and sees institutional failure, which is the price of living in the culture that Keen wants to save. The postmodernist sees the American dream as reserved for the few or the fortunate, because the modernist culture protects its haves. Follow the numbers. With every year that goes by, the gap between the haves and the have-nots increases. Wealth is in the hands of the relative fewer, and pomos ask if this isn’t really a failure.

Technology that was created to serve the institutions now is in the hands of everyone, so yes, depending on your perspective, there is very much a cultural war underway. Media is only the most visible aspect, but every institution is threatened.

Since I first began writing about this, a quote by Leonard Sweet (hardly a digital utopian) has graced the top of my pages: “Postmodernism is a change-or-be-changed world. The word is out: reinvent yourself for the 21st century or die! Some would rather die than change.”

Andrew Keen would rather die than change.

California’s Ninth Circuit Court of Appeals has ruled that Google’s use of thumbnails of copyrighted photographs in its image search application is “fair use” under copyright law. The case has been active since 2001 and involves an adult website and its images of nude women. The appeals court overturned a district court ruling, and while there are still other issues to be resolved, this decision adds considerable weight to case law that strengthens the position of web-based aggregators.

In the decision, the court wrote that there’s no doubt the display of such images is a direct infringement but concluded that the use of the images meets the standards required for fair use. Thus, they overturned an injunction against Google issued by the district court.

We conclude that the significantly transformative nature of Google’s search engine, particularly in light of its public benefit, outweighs Google’s superseding and commercial uses of the thumbnails in this case.

…In this case, Google has put Perfect 10’s thumbnail images (along with millions of other thumbnail images) to a use fundamentally different than the use intended by Perfect 10. In doing so, Google has provided a significant benefit to the public. Weighing this significant transformative use against the unproven use of Google’s thumbnails for cell phone downloads, and considering the other fair use factors, all in light of the purpose of copyright, we conclude that Google’s use of Perfect 10’s thumbnails is a fair use…We conclude that Perfect 10 is unlikely to be able to overcome Google’s fair use defense and, accordingly, we vacate the preliminary injunction regarding Google’s use of thumbnail images.

This is yet another court decision in favor of the disruptive innovations of Media 2.0, and it strengthens the business model of all aggregators that provide a significant public service by placing snippets of copyrighted material in one place to enable user choice.

On the one hand, the decision negatively impacts local media companies who are trying to protect their content, because their business model demands access to their content through systems owned by the company. On the other hand, however, it further opens the door to those who wish to aggregate anybody’s content to provide better community access to all local content.

We should be making the decision that such aggregators will be ours, not only those of the internet pureplay companies like Google.

I’d never heard of this guy until Doc Searls wrote about his new book, The Cult of the Amateur: How today’s Internet is killing our culture. I’ve ordered the thing, because it’s important for me to read this stuff, even though I can tell you it’s all bullshit.

But I’m getting ahead of myself.

Amanda Chapel, aka Strumpette, interviewed Keen (”interview” is perhaps too generous…”worship” would be better) and posted parts of it on her blog.

CHAPEL: Your book sounds like a total refutation of the premise and proposal that is the Cluetrain Manifesto. As Cluetrain is accepted as bible, that would make your book heresy! Your thoughts?

KEEN: Yes, my book is in the heretical tradition of modern dystopian writers like Huxley & Orwell as well as contemporary American cultural critics such as Christopher Lasch, Daniel Bell and Neil Postman. Cluetrain established a biblical orthodoxy around the four C’s: “community”, “citizenship”, “customer” and, most ludicrously of all, “conversation”. What it tries to do is displace the ethical and cultural truths that have traditionally defined our civic life — and replace them with the feel-good language of public relations. At the ideological heart of Cluetrain is the absurd cult of the amateur with its denial that real “truth” or “expertise” can ever exist.

…CULT OF THE AMATEUR is not a book written for Web 2.0 radicals. Instead, it was authored for mainstream Americans — parents, business people and educators — who are troubled by the more extreme cultural and economic consequences of the hyper democratic internet. I expose the dangers not only of “citizen media” like blogging and wikis, but also of online pornography, gambling and identity theft. These are issues that have a significant impact on real people’s lives and need to be publicly discussed and debated.

To which Doc, one of the authors of Cluetrain, responded.

Good God. Where to begin?
Well, not only did Cluetrain contain no “four C’s”, but neither the words “citizen” nor “citizenship” appear anywhere in the original website or the book.
While Cluetrain certainly has an ideological heart, it’s not “the cult of the amateur”, or the cult of anything.
And while I don’t yet know which “ethical and cultural truths” Andrew is talking about, I’m damn sure Cluetrain’s authors would never hope to replace them with “the feel-good language of public relations”. Which we crapped on rather forcefully…

I predict that Mr. Keen will sell a lot of books, because there’s a lot at stake here, and he’s “tickling the ears” of those who wish things to stay exactly as they are. The mainstream press will give him all the publicity he needs to sell books and make money, and that’s really what this is all about.

I agree that the Modern culture is under attack, but who’s to say it doesn’t deserve it or need it. What exactly is Mr. Keen trying to protect? The 20% of the population with 80% of the wealth?

Damned amateurs!

And many people create, because it’s their life, not their livelihood (thank you, Harry Chapin). Ask funtwo if he feels slighted because 15 million people have seen his rendition of the Canon in D. Does he deserve a seat at Mr. Keen’s table?

I’m sorry, but the real tip-off about the foolishness of this book is its title. Calling amateurs a “cult” is an insult of the highest order, and Mr. Keen should be ashamed of himself. What about amateur astronomers, huh? They’re robbing the pros of all their glory, so why not attack them, too?

The biggest mistake all critics of the personal media revolution make is the assumption that it’s an all-or-nothing proposition. It’s not, and we shouldn’t buy the books of people who try to make it so.

This book will no more derail the Cluetrain than any other self-serving diatribe from the status quo. The only train wreck here is Andrew Keen.

In the words of the immortal Gomer Pyle, “Surprise, surprise!”

Viacom moved its Queen today in the high stakes game of chicken chess with Google/YouTube over those copyrighted videos that we’ve written about so much. Viacom filed the suit in U.S. District Court in New York and is seeking $1 billion in damages.

In a statement, Viacom lawyers said, “YouTube’s strategy has been to avoid taking proactive steps to curtail the infringement on its site. Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws.”

This had to happen, and it will be interesting to watch. In essence, the entire Hollywood entertainment hegemony is in the hands of the judicial system now, and I think that even if it wins, it loses. This will simply accelerate chaos and the ultimate creation of a new “Hollywood” spawned by the people formerly known as its customers.

You see, as J.D. Lasica noted in the subtitle of his powerful book, Darknet, Hollywood is at war with the digital generation, not YouTube or Google. It’s their customers they have the problem with, and they can’t sue every one of them (they would if they could). It’s their customers who are uploading the videos to share with their friends, and let me tell you this, the potential for backlash here is pretty significant. And what does it say about the long-term value of an industry that resorts to suing its own customers anyway?

And don’t be fooled by the dollar amount here. It’s a drop-in-the-bucket compared to what’s at stake.

Reaction is pouring in, and I’m only going to provide one link here. It’s to Umair Haque, the brilliant economic guru who never met an archaic business model he couldn’t deconstruct:

Nice one guys - it’s like putting off going to the gym…by ducking into Krispy Kreme.

Gamesmanship doesn’t buy you time or space - it’s just (a desperate) excuse to not meet the fundamental challenge of deep, sweeping strategic reinvention.

It’s the mark of a truly great firm to embrace this challenge head-on. Conversely, not having the imagination, vision, or appetite to embrace this challenge is usually the mark of a once-great firm slowly dragging itself past strategy decay and into strategic irrelevance.

I love Umair.

A front page Wall Street Journal article today examines the history and the conflict between television companies and Google over YouTube and its hosting of copyrighted materials. It’s a pretty fair read with a couple of interesting quotes: (The article is behind the paper’s subscription wall, so I won’t provide a link.)

“The problem the media companies have in dealing with Google is that we’re not in a position of strength,” acknowledges a senior executive at one of the companies.”

…the current strife might eventually prove to be no more than hard-nosed negotiating…

Mr. Schmidt (Google’s Eric) said late last month that he was sure Google “will eventually do some very significant deals” with TV companies, but suggested that none were imminent. “I’m not in a great hurry on this issue,” he said. “It’s more important to get it right.”

There is more at stake in this battle than meets the eye, for the very nature of contemporary copyright law is what’s being challenged. It’s a touchpoint between the controlled distribution of modernism and the shared distribution of postmodernism, and I don’t think anybody really knows where it’s all heading.

I do know that the whole concept of copyright needs to be reexamined by lawmakers, because the public interest is not served by current law. Content creators aren’t served by it either, only the copyright holders — the elite and tightly-controlled world of music, film, video, print and artistic publishers — is benefited, and this artificial government only has itself to blame for its current conundrum.

There’s a motive for creativity that’s rarely discussed in the light of copyright, but it’s expressed in many ways through creative works.

Harry Chapin’s “Mr. Tanner:” “Music was his life; it was not his livelihood.”

Bill Monroe, when I interviewed him in 1979: “I never wrote any songs; I just heard them before anybody else.”

From The Agony and the Ecstasy: “We’re artists. We’ll always be a slave to another man’s nickel.”

The movie “Crossroads” about an old blues musician: “Lots of towns, lots of songs, lots of women, good times, bad times. All he ever wanted to hear anybody say was, ‘He was good. He could really play.’”

Jeong-Hyun Lim (funtwo) in response to all the fuss about his “Canon in D” video on YouTube: “Some said my vibrato is quite sloppy, and I agree with that, so these days I’m doing my best to improve my vibrato skill.” The guy uttered not a word about money. It was all about his music.

So as we watch this whole thing unfold, let’s remember that this is really a cultural war underway. I don’t say that one side is right and the other wrong, because I don’t think that’s really the issue. However, the victor will write the rules for the future, and we ought to be prepared for it to go either way.