It’s not always technical

Last week I heard a story on the radio about a Greek computer science professor that caught my attention. Diomidis Spinellis was hired by the Greek government in 2009 to help improve tax collecting in the financially troubled country. Greece has struggled in recent years with effective tax reporting and collection and now with Greece’s dire financial situation the country needs the money more than ever. I’m sharing part of the story here because I find it closely parallels a common myopia in the anti-piracy space when too much reliance is placed on technical solutions alone to address piracy.

The story describes what happened when Professor Spinellis (Athens University) was hired to develop a data mining solution, that it was hoped, would improve tax collection and what happened when he tried to have his resulting improved data used to collect actual taxes. But if you’re short on time, I’ll just tell you here what happened, reportedly, nothing.

The report begins by pointing out that the Greek government estimates that one third of taxes owed are never paid. That sounds like a pretty big problem! But a problem like that makes for pretty easy data mining so Spinellis was able to provide Greek regional tax offices with targets of tax-dodgers. Unfortunately no increase in revenue followed his sharing of the improved targeting.

Spinellis then shifted his attention to a more local level where he looked at reporting success metrics in terms of cases closed to see if it was possible, through greater visibility, to improve performance at the local offices. This had little effect.

Apparently about two years into his efforts Spinellis realized that (emphasis added):

Fixing Greece’s tax system, and ultimately making the Greek economy work, was not a matter of tweaking his computer programs. It was not an information problem. It was a culture problem.

At the same time the information and the processing Spinellis did is critical. It may be that Greece is able to find a way to motivate people to begin paying more of the taxes they owe and if and when it does they’ll want good information to go on.

This story feels familiar when I think about many technical control schemes I’ve seen, read about and worked on in the past. Technical solutions have their place and the power of good, smart code and connected systems and robust analysis to provide solid and actionable information can be tremendous. But more often than not, more is needed to address the complex causes of piracy on both the micro and macro scales.

You can read the whole, but short, report by NPR’s Planet Money team here.

Did Louis C.K. discover a new business model? Nah.

Recently there’s been some buzz about the way comedian Louis C.K. has released his latest recorded live performance. Louis C.K. funded, directed and released the recording, titled ‘Louis CK Live at the Beacon Theater’, himself. He then built a website and offered the performance as a ‘No DRM’ download from the site for $5. Some have even heralded it a new business model and a challenge to the established entertainment industry. In an article on the Huffington Post, Christopher Mitchell says:

His "fun little experiment" demonstrates the threat posed by the Internet to the old business models of cable companies and content owners like Viacom and Disney.

Louis’s very approach to this release was enough to gain him some attention but things really picked up when he disclosed early sales figures for the release. Just a couple of weeks into the release he reported sales through the site of about two hundred thousand copies (as of late December) with reportedly fifty thousand copies being sold in the first twelve hours. This success has prompted some of the press coverage to suggest that this event sounds (yet another) death knell for the big content publishing industry players, but does it?

First, it’s not clear to me that anything Louis C.K. did was terribly new or that anyone should have really expected any other outcome from his “experiment”. More on this in a future post.

Second, even if something new happened it’s not at all clear that this threatens the industry. In fact, based on the history of the major movie studios it would seem more likely that they would see the success had outside their walls by the likes of Louis C.K and eventually learn to emulate, incorporate or acquire the capabilities to do similar things. Ultimately the ‘industry’ should be expected to find some way to benefit from a new technique that proves itself capable of delivering results.

An example of the major movie studios doing just this can be seen in the rise of the generation of so-called ‘independent filmmakers’ of the 1960s including actor/directors such as Dennis Hopper, Peter Fonda and Warren Beatty and with directors such as Francis Ford Coppola and George Lucas.

In their early careers these so-called independent filmmakers were successful in creating content that people wanted to see. They were able to draw people out of their living rooms and away from their TVs to movie theatres to see films like Bonnie and Clyde, The Graduate and The Godfather. Once the studios recognized that this new breed of directors and actors were able to create content that could draw audiences back to theaters they sought to do deals with them. In a sense this was a win-win situation with the studios providing funding, production and distribution assistance to the directors and by allowing greater freedom to the directors the studios got in return fresh engaging content and ultimately more movie-goers. The studios learned to adopt, adapt, incorporate and ultimately draw in the key talent resulting in a resurgence of popular film in the face of the rise of TV.

Even if Louis C.K. is onto something new and it works and in any meaningful way poses a risk to the broader entertainment industry I would expect the industry first make a serious attempt to adapt before I would count it out.

Is online piracy a big problem? Of course it is.

This post is based on a response to pieces posted by Brad Plumer from the Washington Post and Nate Anderson from Ars Technica

I think there is a serious breakdown in logic in both the blog post by Brad Plumber and  Nate Anderson’s piece on Ars Technica. Essentially the position seems to be taken that because the IP industries are ‘healthy’ compared to other industries that piracy is not a problem. This is clearly what is being implied by the Ars headline “Piracy problems? US copyright industries show terrific health.”

But before addressing why that isn’t true I think it is worth separating the issues of whether online piracy is real, large and has some real negative impact on the earnings of businesses and our economy from exactly how large that effect is and what method ought to be used to calculate its impact.

In any debate about the impact of piracy it should first be accepted that the problem is large. In my experience the industry studies that measure of how much piracy occurs are generally good estimates of the *amount* of piracy. I can say this having the benefit of seeing both published and unpublished studies from the industry side and also seeing the results of large scale empirical measures of (software) piracy done across many countries and over the course of years. The publicly released studies do generally align, at least in terms of the volume of piracy they describe, with the empirical data I’ve seen. So to address the question posed in the blog title; yes, online piracy is a big problem. Although the studies may be scant that does not make them untrue.

How dollar figures are calculated and how they are positioned with respect to their impacts on society is something that can be done in a number of different ways. I think it is mostly this step that causes the eyebrow raising that can occur when people talk about the impacts of software piracy in terms of dollars.

With respect to the central claim made at Ars Technica about the state of the IP based industries. I don’t see how positive growth rates or higher salaries than most American jobs can be taken as proof that the impact of software piracy isn’t real and somehow can safely be ignored. With respect to job losses, the piracy rates I’m familiar with have been, broadly speaking, with the industry pretty consistently for the ten or so years I’ve been paying attention. Just because there haven’t been mass layoffs of the kind other industries have seen doesn’t mean that software piracy doesn’t have a limiting effect on the employment the software or other IP businesses could grow to have.

In general software piracy rates have been substantial and generally going up with growth in typically higher piracy markets such as China, India and others and at the same time the whole market has grown resulting in an increase of the volume of piracy globally as well. During this time the volume of piracy (though not necessarily the rate) has also been increasing in the more developed markets (US, UK, France, Germany, Japan etc.) in general alignment with growth in the overall size of those markets. In other words while the *rate* of piracy may not be increasing in these markets the amount of piracy is. If you want to turn that into a jobs argument then the number of jobs that might be impacted is almost certainly going up along with the volume of piracy.

In the end, the fact that IP businesses pay better and have weathered the recession better than other industries should demonstrate the IP based industries potential as a mature and stable source of employment for the US and therefore should be protected.

Please Pay for the F**king Book

In recent days there has been a story circulating about the tremendous attention a certain humorous book has received. The book “Go the F**k to Sleep” by Adam Mansbach as become an an Internet sensation and has reached the No. 1 spot on Amazon’s Bestsellers in Books list. The book turns the typical form of a children’s good night book on it’s head and uses adult language to convey the honest feelings of a frustrated parent as they try to get a young child to go to bed and to stay there.

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One thing that has apparently surprised people is the amount of buzz about this book and that it reached a position on Amazon’s list without having yet been released.

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Some have even speculated, including the magazine Fast Company and the author Neil Gaiman that the book’s popularity is due to the reportedly widespread piracy of it. The implication is that significant sales of this book can be attributed somehow to the piracy. Fast Company even headlined their article with the provocative: How Viral PDFs Of A Naughty Bedtime Book Exploded The Old Publishing Model. But is there any real reason to believe that piracy has catapulted this book to the top of Amazon’s list or that somehow the apparent success of this book has exploded the business model of book publishing? I haven’t seen anything to suggest that this is true. Here are a few other reasons why I think this book may have achieved the success it has.

First, the book is essentially a gag gift. As a gag gift once you’ve learned about the premise of the gag what you want to do is buy it to give or show or share with someone because it’s funny. The book is sensational and clever and through it’s projection of irreverence and unrestrained honesty provides an ‘if only I could do that!’ kind of catharsis for readers, particularly parents. In fact, I don’t know if the whole book does this but I can say that the concept of the book and the content I have been exposed to, in articles and even on the radio today suggest that this is the central device of the book. Yet this book is not the only sensational book on the top seller list. Other books in the top 20 include books about Area 51, psychopathology, proof of the existence of heaven, Hitler, easy dieting, Navy SEALs, and a rock star’s bio. Sensationalism sells and through the use of adult language and the reversing of the common form of a children’s book into an adult one this book delivers on sensationalism.  Whether or not this book is controversial or even scandalous it feels like it might be and that’s probably enough to sell many copies, certainly it’s enough for it to appeal as a gag gift. 

Second, the book is illustrated and the scenes in the illustrations appear to help setup the content. While this is quite common with children’s books it’s not as common with other kinds of books. If this book were without the illustrations and it was a single paragraph of clever writing per page for the 32 pages of the book and you read it in a pirated PDF online would you then go buy the book? I doubt that I would.

Third, the authors of the Fast Company article and Neil Gaiman seem to be confusing the effect of piracy with broad and fast successful marketing. I know I’m curious about the book, not enough to buy it yet, but having been exposed to it in the media and through social media I recognize it’s cleverness and I’m sure it would be a funny read. The author the article and Mr. Gaiman seem to be suggesting that if I now go find the pirate PDF copy and read it that I will then want to buy the book? Or is it simply the awareness of the concept of the book that has made me curious enough to check it out? If there’s nothing special about piracy that would make me then want to go buy the book (guilt perhaps?) then it would seem that we are left with good old fashioned buzz marketing and exposure as the means by which I find out about this authors product and become curious. In fact, this book isn’t the only book in the top 20 of Amazon’s list that hasn’t launched yet. 

Is it really necessary for the authors to lose all control over the material of the book to drive buzz? Is it really a phenomenon that the publishers ought to, as Fast Company put it, ‘replay over and over again in slow motion’ to learn from? Why shouldn’t it be enough to recognize that a clever and well executed idea for a product is the best strategy for success? Broadly distributing the whole of your content through pirate channels where the need to purchase something to have it doesn’t exist at all then hoping enough people are somehow moved to become real customers is not a business strategy. Hope is not a business strategy, creating products that have value for customers then transacting on that value in the market is a business strategy. In other words, please pay for the f**king book.

Can an educational video about piracy end up encouraging it?

This morning I learned about an educational video that Google had produced for YouTube that seeks to educate end users about basic copyright issues and how they apply to YouTube. At first watch the video seems harmless enough and perhaps a little less effective than it should be. However a few moments after watching it something began to bother me about it and I went back to watch it again. Here’s what I saw the second time.

The video starts out with a very light treatment of copyright and while I agree that it is a good idea to try ways of engaging viewers to help carry what can seem like a dry and abstract set of issues this video goes a bit too far.

The video uses characters, Russell and Lumpy from the show Happy Tree Friends. In the video a few simple scenarios are used to attempt to address a number of common copyright issues that YouTube users may face. Unfortunately the video falls short in a few important ways. The video manages to under-communicate the value of copyright, over-inflate the risks to individuals and positions copyright as confusing and dangerous.

Under-communicating the reasons why copyright is useful and important and over-communicating the risks users face can undermine the effect of the message overall. Because copyright can seem somewhat abstract and some of the risks rather distant it is not hard to fall into this trap particularly when a treatment as light as this one is attempted.

The video starts out by introducing the forthcoming characters as the ‘Happy Tree Friends’, nothing if not a clear signal that nothing following should be taken too seriously.

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We are then introduced to Russell, a friendly and approachable sea otter who is positioned as the violator signaled by his pirate outfit. Dressing Russell this way has the effect of distancing him from viewers (who apparently are meant to identify with him?) and at the same time diminishing him as any kind of threat to copyright holders or content creators. In this way the video signals that any form of piracy or copyright infringement that will be covered in this video is of no real threat to anyone and probably doesn’t need to be taken seriously.

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Next we meet Lumpy the moose who is the content creator and copyright holder in the video. Positioned as a bumbling buffoon his horns point in two different directions, he appears to have buck teeth and eyes that don’t focus properly and he holds his finger near his face in an apparent expression of confusion. As unfortunate as this is he seems to be portrayed as an idiot or as mentally retarded. He is also introduced to us as a character who is literally upside down. It would appear that this is meant to indicate that his character views the world upside down, or at least how this is how it appears those of us who are right-side up as Russell is. Lumpy is also portrayed as uncaring of the experiences of others and as highly self-interested. If this seems like a stretch pay attention to the way he is positioned in the following scenes in the video.

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In the first scenario we see Russell going to a theater to enjoy a movie featuring one of his favorite groups ‘Lumpy and the Lumpettes’ which happens to feature Lumpy as the central character. Lumpy is positioned as a fan of himself and attends a screening of his own movie.

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Unfortunately for Russell Lumpy sits immediately in front of him and blocks his view.

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This provides Russell with a justification for recording the pictures that appear on the screen with his phone. Russell is seen recording the picture with his phone and starting to upload it to YouTube. This scenario seems to justify at least the act of the recording by giving Russell a good reason why he needed to record the video.

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Russell is then caught in the act of trying to upload the video from his phone and he is told that uploading other’s content can “get you into a lot of trouble.” The idea that a cute sea otter dressed in a pirate outfit can get into a lot of trouble for any reason is a bit laughable.

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As if this situation weren’t enough to undermine any sincerity in addressing the issues related to copyright Russell is told that what he is doing “MAY BE COPYRIGHT INFRINGEMENT!” with that statement made in a booming voice that echoes as it fades for dramatic effect. Again the actual effect is of making light of the issue itself rather than communicating that there are any real issues that should be taken seriously. As this statement is made a giant copyright symbol is superimposed over a scared Russell. Overall the tone in the narrator’s voice is overdramatic and sarcastic.

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Following this the notion of copyright itself is explained to the viewer. As this is explained images meant to represent music, books, digital content and art swirl around Russell’s head making him sick. He becomes physically ill and can then be seen and heard vomiting off-screen.

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We are then told that despite YouTube being a free site you can get into serious trouble uploading infringing content. For example you can be sued, this is exemplified by Russell being hit on the head with a gavel. We are also told that you can be held liable for monetary damages and you could ‘lose your booty’ or worse, you could lose your YouTube account. By presenting these consequences in a less-than-serious or even absurd light it has the effect of diminishing them all. For example the video portrays losing one’s YouTube account as more serious than being found guilty in court or having to pay damages.

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Russell is then seen trying to figure out how to express his love for Lumpy and the Lumpettes without getting into trouble. He is seen attending a live performance, which is protected by copyright, as well as creating a fan video with Lumpy’s music playing in the background which is also identified as an infringement. It is explained that mashups or mixes may also require permission from the content owner for some content to be used. The video then attempts to provide an overview of fair use but initiates that by having a box that describes fair use as literally shoving and squeezing Russel out of the way. The notion of fair use is then described in an intimidating way using legalese type language. All of this has the effect of positioning fair use as complex and intimidating and something that one will have to struggle with to be able to understand or use. The content of the fair use box is read in a speed-reading fashion and Russell is seen to be physically struggling with the box while the reading continues. At the end the recommendation to the viewer is to consult an attorney.

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Near the end of the video the narrator congratulates Russell who is finally creating his own video to upload to YouTube. Unfortunately Russell’s attempt to create his own content ends in disaster. What are we meant to take from that?

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The video ends with the narrator indicating that if you have questions about copyright YouTube has resources available. At the same time he is saying this Russell is being eaten by piranhas.

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If this video was intended to provide end users with a basic understanding of what copyright is for and how it works then this video should be viewed as a failure. If the goal of this video was to start a meaningful conversation with end users about the do’s and don’ts of posting material on you tube YouTube then I think this also fails. If Google wants to be serious about clearly communicating with users about copyright issues, they should not trivialize the issues by portraying copyright holders as the not-so-bright character Lumpy and YouTube users as assumed pirates. In the end, respect for copyright and other intellectual property has everything to do with how people perceive these issues and understand them. That is why end users deserve a more serious attempt to improve the general level of understanding and respect for intellectual property.

Watch the video for yourself.

http://www.youtube.com/watch?v=InzDjH1-9Ns

All images are copyrights of their creators.

Want to reduce software piracy? Start a neighborhood Block Watch!

 

In this post I would like to offer an analogy that helps to illustrate the way we view fighting software piracy. I chose this analogy because it underscores the importance of the kind of multi-disciplinary and integrated approach to combating piracy that we recommend to our clients.

Several days ago I was leaving my house when I heard the burglar alarm sound from a house across the street, and saw two young men quickly exiting the home. I dialed 911 and immediately gave chase.They ran to a nearby high school and though I followed them into the building they disappeared.

Fortunately for my neighbors nothing was taken from their home; it seems the alarm was enough to scare them into leaving before they were able to steal anything.

Later, as I thought about what had happened I remembered a piece of research I had read recently about the most effective ways to reduce residential burglaries. The study had been commissioned by the Justice Department, and results found that while alarm systems and increased enforcement are quite helpful, the most effective method for reducing neighborhood crime was having an organized neighborhood or block-watch program.

Similarly, in the fight against software piracy the most effective approach is one where the technology and enforcement capabilities of a company or industry are enhanced by the active participation of its employees, members and customers. The best way to involve those groups is through educational and awareness building activities and by creating opportunities for those groups to play an active part in solving the problem. The benefits of this kind of approach are greatest when the three kinds of activities are planned together and are well coordinated.

Technology can be very helpful in efforts to protect assets just as the alarm system helped to protect my neighbor’s house. However, technology-based approaches should not be relied on solely. Protective technologies can be expensive to implement and almost inevitably are compromised by hacking or circumventions just as home burglar alarms can be bypassed or simply ignored.

In the case of my neighbor’s house, the initial entry of the burglars didn’t set the alarm off, something they did while inside the home triggered the alarm and they quickly fled the scene. This in turn attracted the attention of alert neighbors.

Enforcement is of course a key component of any effort to protect assets. The ability to put enforcement resources on every street corner is no more possible than is finding and suing all of those who commercially (let alone individually) exploit a company’s products. The key to effectively utilizing enforcement resources is to be able to provide accurate and timely information that helps them to target offenders and either catch them in the act or build effective legal cases against them. It is for this reason that both technology and community-based approaches, when implemented properly, can significantly improve the quality and quantity of enforcement targets.

The best catalyst of both technology and enforcement activities is having aware and empowered customers who can make use of available technology and information to reduce the attractiveness of counterfeit or unlicensed use of your product. While the alarm at my neighbor’s house was enough to discourage the burglars from taking anything from that house at that time we also established a significant future deterrent as well when aware neighbors took an active role in protecting our block and actually pursued the burglars nearly resulting in them getting caught.

I would encourage software and content producers to continue to think about ways they can empower their customers to notice when something doesn’t look right and know what to do about it. I know I will.

Microsoft: corporate responsibility and software piracy in Russia.

Yesterday I read with dismay a story in the New York Times (article) describing how some law enforcement authorities in Russia had used investigations of pirated Microsoft software as a pretext for seizing computers and disrupting the activities of activist organizations and small newspapers. The groups appear to be environmental groups, human rights groups and newspapers that were perceived by the authorities as supporting a dissident view.

One person I heard from in Russia with knowledge of this issue said that one reason that this has happened is that Microsoft has made it so easy to tell when the copies of Windows or Office installed on a PC are genuine and when they’re not. This is an unfortunate result of some of the work I was involved in and the story left me hoping that Microsoft would do something to make it right.
Earlier today Microsoft indicated in a blog post (post) that the company felt at least partly responsible for what was happening. In the blog post Brad Smith Microsoft’s General Counsel said:

Our first step is clear-cut. We must accept responsibility and assume accountability for our anti-piracy work, including the good and the bad. …

As part of this responsibility and accountability they will hire an outside and un-involved law firm to investigate the claims made in the article. In addition they will and take other steps to reduce the likelihood of abuse (read more in their blog post).

The real surprise in their post from this morning though is one of the actions they are taking now. Specifically this:

To prevent non-government organizations from falling victim to nefarious actions taken in the guise of anti-piracy enforcement, Microsoft will create a new unilateral software license for NGOs that will ensure they have free, legal copies of our products.

Wow. This comes as a surprise to me. This move is meant to eliminate as a pretext the pursuit or investigation of software piracy claims of Microsoft software made against those kinds of organizations described in the NYT article. The special license covers the kinds of groups named in the article so that such groups would be automatically licensed for the most common kinds of Microsoft software without their needing to take any action at all. It seems pretty clear that Microsoft has been thinking about this for a while but this still strikes me as dramatic action to take and not what one would typically expect from a multinational company that counts local and national governments around the world as key customers.

To me this is a good example of corporate responsibility. I can’t recall another recent example of a company taking a stand like this except perhaps for Google’s actions last year in China.

Welcome!

Welcome! My name is Alex Kochis and I started FiveBy Solutions at the beginning of 2010. FiveBy Solutions helps companies to plan, create and manage anti-piracy programs and activities. Prior to founding FiveBy Solutions I was the Director of anti-piracy activities for the Windows Client division at Microsoft. In that role I helped initiate and drive many of the product-based anti-piracy activities that Microsoft conducted to help protect Windows XP, Windows Vista and Windows 7 from counterfeiting, mis-licensing and other forms of software piracy. I am one of the creators of the Windows Genuine Advantage program and I also helped the Microsoft Office team to setup a similar program, Office Genuine Advantage.

On this blog I will discuss various aspects of planning and implementing anti-piracy activities ranging from a high-level conceptual view to implementing tactical activities. I will talk about market research, how to organize for success, how to plan and implement marketing activities and engineering based investments and how to knit it all together into a cohesive program.

I will also periodically comment on current events particularly where they are relevant to the ongoing dialogue about anti-piracy.

Thanks for reading!

-Alex