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.

A stunning development in the game of chicken that Yahoo was playing with Microsoft. After high-level acquisition discussions broke down today, Microsoft closed its collective briefcase, withdrew its offer to acquire Yahoo, and went home. Deal or no deal? No deal.

While most observers are citing price as the issue (Microsoft upped their bid to $33 a share; Yahoo wanted $37), a bigger issue appears to be Yahoo CEO Jerry Yang’s tactic of cozying up to Google as a way to fight a potential hostile takeover. This drew half of all the text in Microsoft CEO Steve Balmer’s withdrawal letter to Yang:

We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

· First, it would…(encourage)…advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them…

· Given this, it would impair Yahoo’s ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.

· In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit…

· This would also effectively enable Google to set the prices for key search terms on both their and your search platforms…

· It could foreclose any chance of a combination with any other search provider that is not already relying on Google’s search services.

Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft’s proposal to acquire Yahoo!.

This is going to be THE big story over the next few days, as people in the know delve into the facts, but the real thing to watch will be the stock prices of both companies come this time Monday. Yahoo’s is likely to tank, which will mean lawsuits from every direction. Hell, in a few days, $33 a share may begin to look like a lot of money.

(Kudos to Michael Arrington, who appears to have broken the story AllthingsD, who broke the story. Thanks, Dale.)

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.

The group of hackers known as Anonymous may have been behind a series of whirling and blinking applications inserted into a popular discussion board run by the non-profit Epilepsy Foundation last weekend, which caused multiple seizures and other uncomfortable symptoms for users. Wired spoke with victims:

RyAnne Fultz, a 33-year-old woman who suffers from pattern-sensitive epilepsy, says she clicked on a forum post with a legitimate-sounding title on Sunday. Her browser window resized to fill her screen, which was then taken over by a pattern of squares rapidly flashing in different colors.

Fultz says she “locked up.”

“I don’t fall over and convulse, but it hurts,” says Fultz, an IT worker in Coeur d’Alene, Ohio. “I was on the phone when it happened, and I couldn’t move and couldn’t speak.”

The Wired article points a circumstantial finger at Anonymous, whose most recent claim to fame has been an attack against the Church of Scientology. As much as I detest what’s happened here, this just doesn’t seem to carry the mark of Anonymous, and if it turns out that the group truly is responsible, we may see the Feds step in. I mean, why deliberately hurt epileptics?

There may be a fine line between pranks and terrorism, but this one isn’t even close. What’s wrong with us anyway?

In a move that frankly surprises me, Amazon is slowly pulling the plug on the Print On Demand (POD) publishing world by forcing such publishers to have their books printed exclusively by BookSurge, its own printing division. Amazon is informing POD publishers that their “buy” buttons — that which enables people to buy books through Amazon — are being turned off, and reports are flooding behind-the-scenes blogs that this is exactly what’s happening.

I know this, because I’ve just published a POD book through Lightning Source, the same company I used to publish my three Palmer’s Meadow novels. It’s unclear if people will be able to buy the book via Amazon, if we don’t switch our printing from Lightning Source to BookSurge. Lightning Source has had a long relationship with Amazon, even shipping books in Amazon boxes with Amazon’s return address on them.

Many of the people leaving comments on various blogs are shocked by this and question whether top management at Amazon even is aware of what’s happening, because it is so contrary to past business practices of the company.

This is nothing less than extortion, it seems to me, and in addition to the coming public relations backlash, Amazon may be in for legal troubles on this as well. Thousands of small, independent publishers make a living off technology that allows books to be printed one-at-a-time, and Lightning Source has long been considered the leader. A division of Ingram, one of the largest book printers in the world, Lightning Source has a reputation for competitive pricing and extremely high quality. According to what I’m reading in these blogs, the same cannot be said for BookSurge.

There has been no official word from Amazon so far, fueling speculation and raising eyebrows throughout the POD industry.

Stay tuned.

Wall St. Journal report
Writers Weekly
Writers Beware

As we drift farther downstream into the postmodern era, the battle between the elite institutions of modernism and the culture will intensify. The culture is on the offensive, forcing the establishment to defend itself, and that is already underway. On the modernist side, the war will be fought by the keepers of the status quo — the lawyers of the land. On the culture’s side will be technology and the participatory nature that it brings with it.

The defenders know this and will do everything they can to prevent it, trying to use the courts and the legal system in attempts to rope the wild stallion and return it to their barn.

In the last few days, a plan that can only be described as sinister from our friends in the recording industry is being exposed. The idea is right out of the Sopranos — use the threat of lawsuits to force ISPs into “taxing” every user $5 to download music via the Internet. TechCrunch is on top of the story.

The tax will not, in fact, be mandatory. But that is misleading - it won’t be mandatory for ISPs who provide Internet access to actual users. But if ISPs join the scheme, it will apply to all of their customers and be added to their bill as a surcharge.

Why will ISP’s agree to this? Mainly to avoid liability. The core of the plan is a covenant not to sue anyone who pays the fee. (industry insider Jim) Griffin touched on this in the article, saying ISPs will want to “discharge their risk” around file sharing that occurs over their networks.

The rollout plan will hit colleges and universities first, who will simply add the fee to tuition bills so they won’t have to worry about getting dragged into lawsuits. Then Griffin will approach consumer ISPs. If an ISP joins, their users will not have the option of not paying, even if they don’t download music from the Internet. So, basically, the tax is only voluntary if you define avoiding it as not going to college, or using the Internet.

TechCrunch calls it “government endorsed extortion, nothing more and nothing less,” and I couldn’t agree more. While the record companies would find relief from such a plan, imagine what it would do to stifle innovation and creativity.

Meanwhile, the RIAA is lobbying Congress hard to explore the idea of universities “filtering” their networks to stop allegedly illegal downloading. What would you do, if you ran a big school, install filtering applications or simply pass along the $5 “tax” to students. No brainer.

But other battles waging — in the form of lawsuits — in the fight by institutional modernism to reclaim territory it feels belongs to them. To see these suits for what they are, we must examine one of the core philosophies of the modern culture — that everything is cause and effect and, therefore, there’s always somebody to blame (usually the one with the deepest pockets) when something goes wrong. We will never have tort reform in this country as long as the people creating the laws (read: Congress) is made up of trial lawyers, who exploit this blame game to serve themselves, but I digress. As long as “the law” is god in the culture (as it is with the modernist belief), there will always be lawyers ready to take on any cause in the name of blame.

The reason this is on my mind is the strange case in Jacksonville, Oregon, involving Robert Salisbury and Craigslist. Somebody — either maliciously or on a lark — posted ads on Craigslist saying that Salisbury had to leave town suddenly and that everything at his home was free for the taking, even his horse.

As Salisbury was driving home, he noticed truck after truck going the other direction carrying his stuff. All his possessions were gone, and while authorities were able to get some things back, the question remains as to who did this to him.

The case is identical to one earlier from Tacoma, and it’s got people asking questions about, you guessed it, liability. After all, these people were wronged, and victims in our culture are entitled to compensation for their losses, right? So speculation is aimed at Craigslist. They ran the ad. This wouldn’t have happened without them. Hence, it’s their fault.

Along comes Michael Arrington from TechCrunch to make a remarkable statement: Craigslist Is Our Mirror, Nothing Better (Or Worse).

Could a litigiously minded individual find a winning argument to get Craigslist to pay for the damages? Perhaps…And there are certainly plenty to lawyers who’d consider taking the case on contingency, hoping for a quick settlement/shake down to keep PR exposure over this to a minimum.

But what I really think is that Craigslist is just a mirror, and we have to take the good with the bad. Countless connections and transactions are made on the site, and the vast majority are of benefit to everyone involved.

Sure, mainstream press feasts on the occasional accident scene, making it seem like the site is a den of predators waiting to strike at anyone who drops by. Craigslist has it all - Sex, drugs, humiliation and more.

But for the most part Craigslist is just a really good place to find a job, or a boyfriend, or buy cheap furniture for your dorm room. The situation today is simply an exception that proves what an important place Craigslist has taken in our culture. I feel bad for Mr. Salisbury and I hope he gets all his stuff back (especially his horse). But pointing the finger of accusation at Craigslist for what happened is not what should happen next.

Arrington is making a postmodern argument that is foreign to the concept of blame assessment, and I fully support it. Others have come to Craigslist’s defense in this matter, saying that if the company was a profit-hungry corporation, they might deserve a lawsuit, but that Craigslist is more public service than profit-motivated, and thus, shouldn’t be touched.

I don’t like this argument, because I think we’ve gone way overboard in the culture and that any company functioning as a conduit for the actions of people — profit-driven or not — ought to be protected from the shenanigans of the few. We’re a society that supposedly believes in personal responsibility, but every day, I see evidence that this is not so. This is why we have section 230 of the CDA, which classifies such web applications as “common carriers,” similar to telephone companies. You can’t sue the phone company if somebody plans a terrorist attack over the phone, and you shouldn’t be able to sue Craigslist — or anybody else — if bad people do bad things online either.

But somebody will sue Craigslist; I’m convinced of that, and then we’ll see how strongly we feel about such protection.

And there’s one other matter here that must not be overlooked. Media companies who cover this issue must tread very, very carefully, especially the newspaper business, for Craigslist gets the blame (there’s that word again) for the financial woes of the industry.

I’m just sayin’…

Broadcasting & Cable reports that “The FCC has given about 40 ABC affiliates two days–until Feb. 21–to pay their fine–$27,500 apiece–for airing a bare behind in an episode of NYPD Blue.” Really. A bare behind. Cover the children’s eyes, Mabel.

I find this to be so far out-of-touch with reality that it’s fair to ask how long the people of this country will stand for this kind of dictatorial nonsense. The episode was aired five friggin’ years ago, people! Five years ago (at a time when, perhaps, stations actually had money to pay for this kind of intellectual rape. “Thank you, sir. May I have another?”)! Was the episode repeated in cable syndication?

In my view, this action accomplishes three things:

1. It makes the whole process look terribly bad, as in it stinks!
2. It satisfies the extreme right wing of the Republican party.
3. It hurts broadcasters at a time when they need less restriction to be competitive with those who aren’t handcuffed by governmental showboats seeking only to swing their weenies.

The FCC has long outlived its usefulness, and it needs to go. The closer we get to a wired culture, the lesser the government can justify censorship in the name of ownership of the airwaves. Watch for efforts by the FCC to regulate the content of cable next.

Laugh? I thought I’d never start.

(Link — for anybody who cares)

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.

Sumner Redstone reveals his core assumptions about Viacom’s posturing with YouTube in a wonderful interview with The Hollywood Reporter. Go read the whole thing, but here are some snippets:

THR: Let’s talk about new media. There are some that say Viacom has missed the boat when it comes to the Web 2.0 revolution.
Redstone: Wait a minute, wait a minute. We don’t miss boats. Other people miss boats, and they may have missed the Viacom boat. The fact of the matter is, without copyright protection, there is no entertainment business. And so we instructed YouTube to remove 100,000 pieces of video from their site. Why? Because they were using it without paying for it. I don’t believe in that. If you want to use us, pay us. Or make a deal with us that is commensurate with the value of our product. We are the only totally content company, and our content has taken years and years to develop, with a lot of hard work. People who want to use it are going to pay us, or good-bye…

THR: Is taking your content off YouTube an indication that you would prefer to do it entirely on your own?
Redstone: I’m ambivalent, but if YouTube would come along and offer us a deal that is commensurate with the value of the programming that we spend so many millions and so much time to create, we would certainly look at that.

These are textbook economic scarcity arguments, and they make complete sense in the mass content distribution world. Redstone is right, then, when he states that without copyright protection, there is no entertainment business. The key assumption here is that control of scarcity is the vehicle for making money. It’s hard to argue with that.

Where things get messy, however, is this statement: “…THEY (emphasis mine) were using it without paying for it.” Here, he refers to YouTube, but the reality is that the “they” actually refers to the users of YouTube, not the company itself. The real matter then is one of sharing clips via a platform that makes it easy to do so. Let me sing an old song: we’ve been sharing copyrighted materials with each other for as long as content companies have been making it available. We swapped 45s with each other when I was a teenager. The first tool to make it easy was audio tape. Then video tape. Then digital. Now, via public platforms.

Each time one of these innovations came along, the copyright industry’s response was to raise prices. Citing losses of sales, $18 CDs were justified along with $10 movie tickets. Never was the pocketbook of the average customer taken into consideration, and if it had been, perhaps we wouldn’t be talking about this stuff today.

Where do you draw the line in all this? If I invite ten friends over to watch a DVD of The Departed, does that constitute theft? How about twenty friends? These are murky legal waters, the waves of which are currently washing over the whole entertainment business.

In Redstone’s interview, he compares the YouTube situation with cable companies that pay Viacom for their content. This seems a logical argument, but it comes from the notion that YouTube — as a company — is controlling the sharing of video clips. That it doesn’t is the monkey wrench in the argument of the content business, and that’s why I think it would be a whole lot smarter for Viacom to work with YouTube than against it.

The negotiations are continuing, I’m sure. Redstone wants a deal that is “commensurate with the value of our product.” The real question is who determines that value?

We must always remember that the Personal Media Revolution is very personal and a very real revolution. Who are people revolting against? It’s a sad business day, indeed, when your customers become your enemy.

In a case that has ramifications for all media in the digital space, a federal judge in Austin, TX has dismissed a $30 million lawsuit against MySpace over the sexual assault of a 14-year old girl. The girl, who listed her age as 18 on her MySpace profile, was first contacted by her assailant on the site. The suit charged MySpace with negligence, gross negligence, fraud and negligent misrepresentation.

The judge cited the Communications Decency Act of 1996 in dismissing the negligence and gross negligence charges, something we all need to consider. The CDA is increasingly providing safe haven for web businesses, because it protects them against messages people send to each other via a site. This includes comments on blogs, for example.

This is important, because liability is one of the key factors in broadcasting’s slow entry into the more vibrant, interactive paths of Media 2.0. What this ruling says, in part, is that MySpace should be given the same protection as any common carrier, such as a telephone company. If, for example, a sexual assault victim made contact with his or her assailant via telephone, the phone company would not be liable for damages in any case. Providing the vehicle for interaction does not automatically put that vehicle in our legal system’s bullseye.

But lawyers make their living in other people’s (deep) pockets, and case law is their drug of choice. Nobody knows that better than media companies, so I don’t blame anybody for being cautious. Judge Sam Sparks wrote, “If anyone had a duty to protect Julie Doe, it was her parents, not MySpace.” As a parent of children who use MySpace, I couldn’t agree with that more.

“This is allowing sites like MySpace to avoid the responsibility to make the Internet safe for children,” Jason Itkin, the lawyer in the case, said. “MySpace knows its Web site is a playground for sexual predators. Because of that, MySpace should be doing some very basic safety precautions.” This kind of inflammatory rhetoric is stock-in-trade and plays off fundamental fears that many people have about the wild west nature of the web. As I’ve written before, however, two-thirds of the users of MySpace keep their profiles “private,” which puts the “stalking” red herring into perspective.

The Wall Street Journal’s legal blog also points out that the head of security for MySpace, Hemanshu Nigam, is not the kind of guy who would take threats lightly.

Nigam joined MySpace after four years at Microsoft, where he was responsible for criminal compliance, security, and law enforcement affairs. Prior to joining Microsoft, the BU Law grad headed up the Motion Picture Association of America’s enforcement arm, and before that was a prosecutor for both the DOJ’s Criminal Division and the L.A. County DA’s Office.

The lawyer in the Austin case plans an appeal, and it’ll be interesting to see how that plays out. There are similar lawsuits against MySpace in California.

Proceed with caution, but do proceed.

(Here’s the ruling, thanks to Howard Bashman’s unique aggregator)