Author: Jeff John Roberts

  • BuzzFeed partners with CNN, announces LA-based “social video” studio (Update)

    Viral media site BuzzFeed on Tuesday launched a new YouTube channel in partnership with CNN that is aimed at bringing news to young viewers.

    The deal, which was reported by the Wall Street Journal, will see BuzzFeed invest a low “eight figure sum” over the next two years to build up the platform.

    Update: BuzzFeed followed up the CNN news by announcing it will “aggressively expand” its video operations under web video pioneer, Ze Frank, and that it will “build a social video studio, designed to create news and entertainment video content exclusively for YouTube.”

    The first CNN video to appear on the site appeared Tuesday morning and features a mash-up of dramatic or heart-tugging clips drawn from famous rescues that have appeared on TV in recent years — Chilean miners, children in wells and so on:

    The clip, which is hosted on a new BuzzFeed vertical called CNNBuzzFeed, includes ponderous voiceovers extolling the human spirit. It has yet to appear on CNN’s website.

    The partnership appears to be an effort to bring some viral energy to CNN while allowing BuzzFeed to stake out more ground amidst mainstream media outlets. In the last year, the site, which was first known for cat videos, has broken several major news stories and formed partnerships with the likes of the New York Times.

    CNN and BuzzFeed have not described the revenue angles of the deal, though it is worth noting that the conclusion of the “Rescue” video brings up invitations to watch clips other YouTube channels such as the Young Turks.

    Here is how BuzzFeed described the nature of the YouTube partnership:

    Production will be headquartered in a newly constructed social video studio in Los Angeles which will have a coffee shop and store where influencers, thinkers and celebrities will be able create informal videos made for the social web. The team will grow to over 30 people in the coming months. BuzzFeed Video will have a dedicated, prominent placement on the BuzzFeed homepage that will bring new forms of social content to the site’s 60MM unique visitors. Expansion plans include creating new channels, including recreating a video news format that is shareable.

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    • Vine, hip-hop and the future of video sharing

      What does video tool Vine have in common with iconic rappers like the Beastie Boys and the Notorious BIG? More than you think. Like hip-hop, Vine is way to sample and collect culture — and it may have to run the same legal gambit that rappers did a decade ago.

      If you haven’t tried it, Vine is a tool to make looping, six-second video clips and post them on social media or a website. The company, which is owned by Twitter, launched in January and its videos have already become a part of the Tribeca Film Festival, the U.S. Senate and major marketing campaigns.

      A new video mash-up culture

      Vine exists because of new smartphone technology but it also replicates older forms of mashup culture. In particular, it mirrors what pioneering hip-hop artists started to do in the 1980s — taking sounds from myriad sources and sharing them through records like Paul’s Boutique and Ready to Die.

      Those hiphop records are aural tapestries that today stand as monuments to a new form of music and community. In the 2000s, however, Vine screenshotcopyright collectors came along and sued the rappers — resulting in a drawn-out debate over where to draw a line between culture and intellectual property theft. Hip-hop  largely prevailed but was damaged in the process.

      Now, a fight over a Vine video last month suggests history may repeat itself but this time, on the video front. The dispute involved the musician Prince using a law called the DMCA to force Vine to take down six-second concert clips posted by a fan. The fan didn’t oppose Prince’s takedown demand, meaning no has ruled on whether a six-second clip actually infringes copyright. But if a court did look at the Vine case, the decision process would lead right through hip-hop.

      In the 1990s, hip-hop artists called the sounds they use “samples.” Copyright owners, however, called it theft instead and sued the musicians. The conflicts led to important court decisions about music, but whose principles apply equally to Vine.

      Notorious B.I.G.As the Disco Project explained in a thoughtful analysis of the Prince case, the most relevant precedents involve the Notorious B.I.G. and the Beastie Boys. Both were involved in famous cases involving short samples.

      In the case of the Notorious B.I.G., a Tennessee court shut down store sales and radio plays of the late rapper’s “Ready to Die” album, and a jury awarded $4 million in damages — all over a three note horn riff. An appeals court, which had earlier written “get a license or do not sample,” upheld the verdict in 2007.

      As law professor Tim Wu explained at the time, the case and others like it were especially absurd because the copyright owner was not even a musician but a one-man corporation who had obtained the music rights under shady circumstances.

      Fortunately, in the case of the Beastie Boys, a California appeals court took a more rational approach to the issue and ruled that a six second (the same length as a Vine video!) flute sample on the song “Pass the Mic” didn’t infringe on copyright. The Supreme Court, in 2005, refused to reconsider the decision.

      The upshot, however, is that today we still don’t know for sure how long a sample can be before it infringes copyright.

      Twitter declined to comment on whether it believes Vine videos are covered by copyright law’s “fair use” exception, but a source familiar with the company told me that the decision to make the videos six seconds long was not a coincidence.

      Chilling our new visual culture

      The trouble with Prince’s request to take down the Vine videos is not so much the disappearance of the videos themselves — but instead that Vine and other forms of visual expression could meet the same fate as early hip-hop.

      Pauls BoutiqueWhen the Beastie Boys released their sample-stuffed 1989 masterpiece, Paul’s Boutique, the law was still in a gray area and no one was suing hip-hop artists. That’s no longer the case. As copyright scholars have explained, the threat of lawsuits and the astronomic cost of clearing samples means, today, no one could make an album like Paul’s Boutique in the first place.

      And that’s the danger posed by Prince. Right now, we’re enjoying a rich new age of images — everything from Vine videos to BuzzFeed cat GIFs that are shared, recast and then shared again. If lawyers began to throw copyright grenades into this mix, these splendid strains of creativity could be quickly snuffed out.

      Does this mean that all Vine videos should be fair use? It’s hard to say. People are already using the platform to produce clever and original works of art — the sort of thing copyright law is meant to reward. Likewise, big companies who use Vine for marketing have a case for using intellectual property law to protect their brands.

      It seems inevitable that these issues will get resolved sooner than later. The biggest task for now, though, is to find a way to do so without resorting to the harsher tools of copyright law, including the $150,000 damage demands that are a common feature of cease and desist letters.

      Congress is right now reviewing the Copyright Act. The process presents a perfect way to protect and foster this emerging age of visual culture — rather than try to smother it like hip-hop. But let’s give the last word to the rappers (click on the Vine vid below) :

      (Image by R. Gino Santa Maria via Shutterstock)

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    • Fight over TV streaming heats up as broadcasters file new lawsuit in Washington DC

      Major broadcasters filed a new lawsuit this week as part of an ongoing efforts to shut down services like Aereo that stream over-the-air TV to computer and mobile devices.

      In a complaint filed Thursday, the broadcasters — ABC, Fox, NBC, Allbritton Communications and Telemundo — asked the U.S. District Court for the District of Columbia to issue an injunction to stop the service known as Aereokiller from streaming their shows.

      Aereokiller, which is available from the website FilmOn, is operated by Alki David, a billionaire who chose the name to tweak Aereo, thehigh profile streaming service backed by media mogul Barry Diller. Here’s a closer look at Aereokiller streaming a live show on NBC:

      Screen Shot of Aereokiller

      “It’s nonsense,” David said by phone of the lawsuit. “Since 2010, we’ve been arguing that Filmoon is a virtual cable platform and that we want to pay retransmission fees.”

      The new lawsuit is important because it’s part of a great game between the broadcast TV industry and Diller over how and when consumers can watch TV. Aereo won a major victory in April when an appeals court in New York ruled that the service did not infringe copyright because its tiny antenna technology delivers a private stream — rather than a public broadcast — to each subscriber.

      Aereo’s victory, however, only carries force in New York, Connecticut and Vermont. And its prospects for expansion have been seriously undercut as a result of a California judge’s decision to shut down Aereokiller on the entire west coast.

      The latest lawsuit, then, is part of the TV industry’s effort to gain more ammunition ahead of a likely Supreme Court challenge. The Hollywood Reporter, which first reported the story, suggests that the broadcasters likely chose to go after Aereokiller because it is an easier target than Aereo.

      Aereo, meanwhile, is going live in Boston this month. CBS has threatened to sue it there too but has yet to make good on the promise. You can read the DC complaint for yourself here:

      DC complaint against Aereokiller


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    • Apple ebook antitrust trial set for 9-12 days in early June

      The Justice Department, state governments and Apple met in a Manhattan courtroom on Thursday before U.S. District Denise Cote to make arrangements for an upcoming trial in which Apple is accused of colluding with big publishers to fix the price of ebooks.

      The purpose of the hearing was to set schedules, review witness lists and go over last-minute evidence objections ahead of the trial. Cote proposed that each side should be given 22 hours over a four day period plus a final day for closing arguments; the federal government said it would need at least 30 hours to make its case, and Apple requested the same, meaning the total trial would last 12 days. Cote said she will decide in the near future.

      The parties also reviewed the witness list, who include prominent publishing CEOs like Macmillan’s John Sargent and Apple executive Eddy Cue. Today’s hearing also raised the possibility that News Corp CEO James Murdoch, who exchanged a series of emails with Apple’s Steve Jobs, could take the stand for cross-examination; the federal government will decide in coming days, on the basis of an evidence issue, whether this will be necessary.

      Much of the trial, however, is unlikely to feature dramatic CEO testimony. Instead, the core of the trial is likely to slog through recondite economic arguments and civil evidence issues; part of today’s hearing focused on expert witness opinion about the competitive effects of agency pricing and whether it coincided with Apple’s economic self-interest.

      Today’s hearing also focused on an ongoing dispute in which Apple is attempting to force its competitors, especially Amazon, to unseal evidence they have submitted as part of the proceedings.

      At the outset of the hearing, in a courtroom that rises 15 stories above lower Manhattan with a view of the Brooklyn Bridge, Cote stressed that the case represented an enormous amount or work, and told the parties to call her “day or night” if they decided to settle.

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      • Twitter unveils new multi-screen deals with “Twitter Amplify”

        Twitter is teaming up with everyone from Bloomberg Television to Major League Baseball as the social media site expands its range of “multi-screen” partnerships. Other new partners, announced Thursday morning at an advertising event in New York City, include Conde Nast, New York magazine and Discovery.

        Twitter is framing the partnerships as a way for marketers to reinforce brand messages by reaching consumers on television and small screens at the same time. For consumers, this is likely to mean seeing more video content within their Twitter feeds and more hashtags on the shows they watch. In its news release, Twitter framed it this way:

        We think these types of two-screen sponsorships are a win-win-win. Users receive spectacular, timely content that rounds out their TV experience or reminds them to tune in. Powered by Promoted Tweets, broadcasters reach new audiences and open up new business lines. Brand advertisers get, for the first time, an integrated cross-platform tool for reaching the social conversation wherever it happens.

        The company is branding the deals as “Twitter Amplify” or, as one executive said on stage, simply “Twitter Amp.” Other partners, which join earlier participants like ESPN and the NFL, include A&E, Time Inc and Warner Music.

        The announcement is part of Twitter’s effort to strut its stuff before Madison Avenue and to show that it is now part of “the New York City community.” The company is engaged in a major push to raise revenue as it prepares for an IPO widely expected to take place later this year.

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      • Amazon: victim or aggressor? Issue will frame Apple ebook trial

        Apple and the Department of Justice are set to spar in a closely watched price-fixing trial set for early June but, increasingly, attention in the case is turning to a third party — Amazon. In pre-trial filings, Apple is trying to expose redacted evidence that the company claims will “embarrass” Amazon and show that the retailer engaged in the same activities for which Apple is now on trial.

        The claims are set out, in part, in a letter last week from Apple’s law firm that urges US District Judge Denise Cote to reveal information about its pricing as well as “internal discussions about the inferiority” of its Kindle e-reader compared to the iPad. Apple also says the redacted information will help expose the “fiction” that Amazon was “forced” to adopt a new pricing system as a result of a 2010 arrangement between Apple and five big publishers.

        This arrangement — known as “agency pricing” — resulted in publishers requiring retailers to sell ebooks on a commission basis, in which publishers could set the price. This led the Department of Justice, state governments and class action lawyers to sue Apple and the publishers; the latter settled the cases and agreed to pay out millions but Apple is holding its ground.

        Apple argues that the Department of Justice is wrong to portray Amazon as a victim, along with consumers, of a conspiracy to raise prices. Instead, the company claims that Amazon was contemplating agency pricing too and was pleasantly surprised when the publishers took it up on their own. Apple is also using colorful emails obtained from Amazon executives to make its point:

         ”I guess what we never figured in was the idea that five publishers would band together and insist on receiving worse terms,” the email said. “And then Amzn would be ‘cornered’ into accepting them.”

        “Hysterical, isn’t it?” the Amazon executive replied. “Jedi Mind Tricks here in Seattle.”

        The email exchange was reported by Reuters legal reporter, Alison Frankel, whose recent analysis portrayed Amazon as the “elephant in the (court)room.” Her report adds that Judge Cote stated that she doesn’t want the trial “distorted by a larger battle between two commercial giants.”

        What do others think? Apple’s view is likely to find support in at least some quarters. The publishing community continues to fume about Amazon’s enormous clout in the book business. Meanwhile, some copyright lawyers have joked to me in the past that Amazon should send US Attorney General Eric Holder a holiday card for suing Apple and the publishers.

        Amazon will get to offers it own views directly; its executives, along with publishing executives, will be among the witnesses testifying on behalf of the Department of Justice.

        For now, Judge Cote has decided that the evidence Apple is seeking will remain redacted. But the issue will not doubt arise again if the trial, scheduled to begin on June 3, goes ahead as planned. There is a pre-trial conference planned for later this Thursday — we’ll let you know if any new twists emerge.

        Here’s the letter from Apple’s law firm:

        Amazon to Disclose (Request)


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        • Twitter does the two-step, gets serious on security with new authentication feature

          After a series of high profile hacks, Twitter is finally getting serious about log-in security with a new feature that will require users to enter an extra pin code when using non-familiar devices.

          The feature, known as “two-factor” authentication, is already used by companies like Google and Apple and works by sending a pin code via text message to a user’s cell phone. Twitter has details and a tutorial video here.

          The decision to add an extra security feature comes after hackers have repeatedly gained control of high profile Twitter feeds. The most prominent example occurred last month when hackers used the Associated Press’s account to say bombs had injured President Obama. The fake tweet roiled financial markets and led to calls for Twitter to improve its security features.

          Attackers have also targeted CBS, the BBC and the Onion. The latter offered a candid account of how the hackers phished employees accounts and induced some of them, including a person with control over social media passwords to share log-in information.

          Two factor authentication would likely have prevented those attacks because the attackers would have had to enter a password sent to the employee’s cell phone.

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        • Vermont sues patent troll over small business shakedowns

          Well, this is good news. The state of Vermont has decided to join private companies like Twitter in taking the fight to patent trolls — shell companies that don’t do anything except use old patents to extort businesses into paying licenses for common technology.

          In a complaint filed in Vermont’s Supreme Court, the state accuses MPHJ Technology — which operates 40 shell companies through a UPS store in Delaware  – of violating consumer protection law by demanding small businesses buy a license or face a patent lawsuit.

          “Hopefully would-be patent trolls will see this and realize that if you want to prey on Vermont businesses large and small they’re going to have a fight on their hands,” Attorney General, William Sorrell, said by phone on Wednesday.

          The patents in question date from the year 2001 and involve technology for scanning documents and attaching them to an email. Despite being around for more than a decade, no one tried to enforce the patents until 2012 when an attorney from Texas — a notorious troll forum — named Jay Mac Rust began brandishing them.

          The Vermont complaint explains that Mr. Rust and his friends have been sending letters to hundreds of businesses in Vermont, including non-profit groups that help the disabled, and telling them to pay $900-$1200 or face a federal lawsuit.

          Patent trials are one of the most expensive forms of litigation and are an ordeal for even big companies — let alone a small shop in the Green Mountains. Worse, the defendants are out of luck even if they win since the shells that sue them don’t have any assets.

          According to Sorrell, “patent trolling is a national problem” and the trolls have been harassing Vermont’s tech sector, as well as small business and non-profits, for years.

          Vermont’s lawsuit, which demands the troll pay $10,000 for each letter it sent out, is based on consumer protection laws that forbid deceitful communications. The state’s governor this week also signed a new anti-troll law that Sorrell describes as “another arrow in the quiver.”

          The site will almost surely raise constitutional issues concerning state power and patents but, for now, businesses will welcome a big new ally in the fight against patent trolls; others include Google and patent scholars like Mark Lemley and Brian Love. It will be interesting to see if states with big tech centers, like California and Massachusetts, ask to intervene or file suits of their own. You can read the complaint yourself here:

          Vermont v MPHJ Technologies Complaint


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        • Twitter tool lets brands sign up customers inside a tweet

          Even as Twitter has grown into a media and marketing giant, not everyone is persuaded that the social media site is useful for selling things. As one marketer recently lamented to me, the platform’s effectiveness is hard to measure — and justify to clients — because “no one’s going to buy a car off Twitter.”

          The perception, then, is that Twitter is useful for what the ad types call “top of the funnel” marketing — building brand awareness and so on — but that it has yet to deliver paying customers in the way that Google Adwords can. Today, though, it appears Twitter has responded with a new ad product that will make it easier for brands to assess what they get for their marketing bucks.

          The product, called a “Lead Generation Card,” lets marketers post expanded tweets that invite users to sign up for stuff right inside Twitter. The company showed what this might look in a blog post describing the product:

          Screenshot of Twitter Lead Gen card

          According to a spokesman, the idea reduces friction in the marketing process because Twitter already has users’ email and other contact information — meaning that it takes just one click for a user to connect with the brand.

          The move comes as Twitter continues to expand its ad products, including its self-serve platform, ahead of a rumored IPO later this year.

           

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        • From Cronkite to Couric: Internet Archive gets $1 million to expand TV news collection

          The 20th century’s printed output is available in digital format, but that’s not the case for television — decades worth of TV broadcasts, which represent a rich news and cultural heritage, are instead locked up and unavailable. The Internet Archive has been trying to change that. Starting in September, the San Francisco non-profit embarked on an ambitious plan to collect all shows going back to the start of TV, and offer clips of them available online.

          The outfit got a big boost this week thanks to a $1 million donation from the John S. and James L. Knight Foundation, which will be used to expand its growing video library and to make it easier for video browsers to find everything from Jon Stewart to Walter Cronkite.

          Right now, the Internet Archive has more than 400,000 news clips dating from 2009 that it offers as a research tool to scholars, journalists and the general public. Users can search them using close captioning tags and other metadata the Archive has assembled.

          “You can discover culture that’s languishing unseen and unheard,” Roger Macdonald, Internet Archive television news project director, told me by telephone.

          He explained that the Internet Archive, which last year began using BitTorrent as a distribution system, had been recording the broadcasts for years — “we ingest, index and make available,” in Macdonald’s words.

          The new money will help the nonprofit afford the petabyte’s worth of broadcast data it collects every year, and stores on servers located at its office, a converted Christian Science church in San Francisco’s Richmond district. Macdonald said the Internet Archive will also hire people to improve what is for now a fairly rudimentary user interface.

          There is also the question of how the Internet Archive will be able to obtain older TV footage — think Dan Rather, Howard Cosell, I Love Lucy and so on. For now, the television networks jealously guard their copyright and make such content available in very limited ways; for instance, users can watch old shows from NBC, ABC and CBS at New York’s Paley Center for Media — but cannot do so online.

          Macdonald said the Internet Archive, which lets users watch 30 second clips or rent DVDs, is in talks with the networks about gaining access to their content in the capacity of a digital librarian.

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          • Why racist, nasty comments are better than none at all

            Above the Law is a tabloid blog where the legal community comes to get news and gossip — and to say terrible things about one another. Many of the reader comments on the site are so mean or hurtful that they make notorious troll forums like Gawker feel like a petting zoo. And the Above the Law staff wouldn’t have it any other way.

            At a time when many publishers are trying to improve comments or else refuse to permit reader participation in the first place, Above the Law continues to let readers be as abrasive as they like. For example, here’s a screenshot of responses to a story by editor Elie Mystal about a scholarship for white people at Columbia:

            Screenshot of above the law

            I spoke this month with Mystal and John Lerner, CEO of Breaking Media (the company that owns Above the Law), to learn more about the site’s comment philosophy and its effect on business strategy.

            “If you write on the internet, people will say horrible things about you. We allow them to say it to our faces — if we didn’t, they’d say it on Twitter or Reddit or Tumblr,” said Mystal. “Anyone who wants to write professionally better be prepared for ad hominem, unfair personal criticism. That’s not just part of media in 2013.”

            Above the Law’s writers, most of whom are Ivy League law school graduates, are frequent targets of personal vitriol by readers, but Mystal says he still appreciates them.

            “Commenters got me my job. Online people voted me in. I remember that when they’re screaming about how I look like a walrus.”

            The commenters also serve as a vital part of the site’s overall content and business strategy. Lerner explained that the story comments appear as separate web pages, which allows Above the Law to sell additional ads, and that the site also works with comment platform Disqus to sell sponsored comments on its app. And, contrary to popular wisdom, advertisers aren’t skittish about their brands appearing next to off-color stories (like this one about a lawyer who invoked the First Amendment to excuse “slut-shaming” someone who turned him down) – a quick look shows that most of ATL’s sponsors are big and boring professional firms.

            “It’s not like five years ago when a lot of advertisers didin’t know how the internet works,” said Mystal. “They realize there’s horrible comments on the Washington Post too.”

            Above the Law readers can flag comments as offensive but that doesn’t mean the editors will respond. The only thing likely to be pulled down is something that offends absolutely everybody — “no one one cares if you’re offended”, says Mystal, adding that moderating each comment would be a full time job.

            Ultimately, the no-holds-barred policy is not just simpler for the editors to oversee, but may also offer a more authentic view of humanity than the curated comments of other forums:

            “I used to work in a big firm in downtown Manhattan, and there were some racists there. We’re the legal community, and there’s people who hold racist, homophobic views — you’re going to meet people like that. Those people may be your boss.”

            (Image by ArTono via Shutterstock)

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            • New “clues” about the Bitcoin founder — and the case for leaving him alone

              Surging interest in Bitcoin, the crypto-currency that is mined and distributed without a central bank, has brought a fresh wave of speculation about its pseudonymous founder, Satoshi Nakamoto.

              The latest theory comes from IT pioneer Ted Nelson, who offers a three-part hypothesis – based on the Bitcoin inventor’s intelligence, publishing methods and interests — to show that Satoshi can be none other than Japanese math professor Shinichi Mochizuki.

              Nelson’s “deduction” (which Forbes and others have portrayed as more crackpot than convincing) comes weeks after programmer Sergio Lerner published a blog post that claims to show Satoshi has mined a fortune worth of Bitcoins, and that he has spent only a small fraction of it. A related report by The Verge endorses Lerner’s account and says the financial trail provides new clues to help establish Satoshi’s identity.

              This “who made Bitcoin?” buzz is a fun parlor game, especially at a time when everyone from serious investors to Homeland Security are clamoring to get a piece of the new currency. But, while many of the guesses are as silly as saying Lewis Carroll is Jack the Ripper, the process also raises the question of whether Satoshi is entitled to be left in peace.

              Last week, someone who has corresponded with Satoshi told me he believes the Bitcoin inventor is one person, not three as some suggest, and that he is not Japanese (this is consistent with the Forbes writer’s theory that the pseudonym is a tribute to 1980′s Tokyo cyber-punk culture). I asked him why Satoshi has decided to remain anonymous in the first source.

              According to the source, who is a Bitcoin developer and did not want to be named for this story, Satoshi’s motives are not rooted in myth-making or anything sinister. Instead, they reflect a simple desire for privacy and are consistent with the ethos of open-source coders who work on a project out of altruism or interest and then pass it on to others when they want to move on.

              If this is the case, then Satoshi is part of a tradition of private people who eschew the spotlight and prefer to let their work speak for themselves. It’s easy to think of others such as Groklaw‘s Pamela Jones (who does heroic work opposing software patents), cartoonist Bill Watterson and literary figures like Harper Lee and Emily Dickinson. Together, these quiet and relatively anonymous figures provide an inspiring counter-narrative to suggestions by Google and Facebook that anonymity is somehow sinister and that our entire selves should be open for media merchandising.

              The point is that we may never know the identity of Satoshi Nakamoto — and that’s okay.

              (Image by Shutterstock 69195535)

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            • New York Times CEO calls digital pay model “most successful” decision in years

              In a commencement address to business students at Columbia University, New York Times CEO Mark Thompson hailed the company’s digital subscription strategy and dismissed skeptics who say media outlets can’t reinvent themselves.

              “[T]he launch of the pay model is the most important and  most successful business decision made by The New York Times in many years. We have around 700,000 paid digital subscribers across the company’s products so far and a new nine-figure revenue-stream which is still growing.”

              Thompson added that media pundits predicted that the Times’ subscription model, which is based on a so-called “metered paywall,” would be a disaster when it launched in 2011. Since then, he noted, it’s become a standard for the rest of the newspaper industry.

              “In modern media, you could make the case that the best way forward is to listen carefully to what the industry has to say and then do the exact opposite.”

              Thompson also equated disruptions in the news business to what’s happening in other industries, like high tech and car rental, and said that risk-taking is the secret of America’s culture of innovation and entrepreneurship.

              Commencement speeches are, by nature, restricted to this sort of soaring stuff. A skeptic, however, might note that the New York Times‘ digital subscription model has already begun to plateau and that the company is still shedding ad dollars and assets. Likewise, Thompson, who arrived from the BBC only months ago, still has to prove he can run an institution that isn’t supported by mandatory contributions from the public.

              But the tone of Thompson’s speech is the right one, and it’s welcome to see the New York Times waving its banner not just in the safe halls of Columbia’s journalism school but amongst the MBA crowd as well. If you want to read more of what he said, here’s a longer excerpt:

              The American news business is living through revolutionary times. For The New York Times, which I joined six months ago, it means catapulting the Grey Lady into a world very different from the one in which she spent her first century and a half: multimedia, multi-platform, multi pretty much  everything.

              There are some things we’re not going to take risks with. The quality, authority and accuracy of our journalism. Our values, including the time-honoured but still vital tradition of keeping our journalism independent from the commercial interests of the company. In the age of so-called ‘native’ advertising in which the boundary between editorial and commercial content is more and more frequently blurred, that tradition of maintaining a clear line between the journalism and the business of The New York Times is more important than ever.

              But we will not secure the future of The Times without the kind of bold innovation – in products and services, in
              business-model – which is intrinsically and necessarily risky. Two years ago The Times launched a new digital pay model, essentially asking users of The Times on digital to do what more than a million print users of the newspaper were already doing, which is to pay a regular subscription in return
              for extensive access to our journalism.

              The consensus among the experts was that it wouldn’t work, was foolhardy in fact and not needed. People just weren’t prepared to pay for high quality content on the internet and, besides, wasn’t digital advertising enough – wouldn’t it grow until, just as with print advertising in the golden age of physical newspapers, it alone was enough to support America’s newsrooms?

              In fact the launch of the pay model is the most important and most successful business decision made by The New York Times in many years. We have around 700,000 paid digital subscribers across the company’s products so far and a new nine-figure revenue-stream which is still growing. Much of the rest of the US newspaper industry is now following suit. And developing this pay model, launching a suite of new subscription products to attract additional new subscribers, is central to our plans for the future

              What’s interesting, though, was that initial widespread skepticism. It won’t work. It’s mad. They’re barking up the
              wrong tree.

              In many ways, the thing that gets disrupted in a disruptive age is the conventional wisdom. Wherever you end up, in this country or abroad, starting your own business or joining an established company large or small, you’ll bump into conventional wisdom and all the apparently excellent advice that flows from it. But the definition of a disruptive age is one in which the discontinuities outnumber and overwhelm the continuities and in which predictions based on the past or the smooth projection of current trends into the future frequently prove unsound. Conventional wisdom tries valiantly to keep up, to recalibrate in the light of recent developments, but because it cannot foresee transformational breakthroughs or the kind of behavioral and business-model pivots which digital technology makes possible, it never can.

              Take my industry. The movies are finished. TV advertising is dead. Exactly what happened to music will happen to TV. Nobody wants news anymore. No one will ever pay for anything on the internet. Not just said, but said widely and widely believed. And – for the most part and within the time horizon which the prophets themselves were suggesting – just plain wrong.

              All of the strategically successful things I’ve been involved in – whether a set of new TV channels or developing the BBC’s digital on-demand service, the i-Player – have had this thing in common: that, at the point of launch, pretty much everyone not involved in the project has agreed that it was going to be a total disaster. In modern media, you could make the case that the best way forward is to listen carefully to what the industry has to say and then do the exact opposite.

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            • Crowdfunding a crack scandal — did Gawker go too far?

              Who says Canada is boring? The mayor of the country’s biggest city is at the center of a crack cocaine scandal, and now U.S. blog Gawker is asking readers to chip in and buy the video evidence for $200,000.

              In case you missed it, the controversy turns on Toronto’s buffoonish mayor, Rob Ford, who has embarrassed the city numerous times in the past but has now outdone himself: Reporters from Gawker and the Toronto Star claim to have witnessed a clear video tape that shows Hizzoner sucking on a glass crack pipe and calling the leader of Canada’s Liberal party, Justin Trudeau, “a faggot.”

              The video in question is now in possession of shadowy figures who want cash for it. The Star, a respected newspaper, turned down an offer to sell it for $40,000 and Gawker, which says the price is now $200,000, hasRob Ford crack screenshot taken to Indiegogo – a site normally used to raise money for artsy people — to ask the public to buy the video. The “Rob Ford Crackstarter” (see pic at right) has 10 days to reach its goal and has already pulled in $26,000 as of Friday afternoon.

              Gawker’s gambit raises some very juicy ethical questions. First, while bringing down crack-smoking mayors is clearly in the public interest (see Barry, Marion), it’s less clear whether it’s acceptable to pay people who are likely serious criminals in order to advance the story.

              And while check-book journalism has been around for centuries, turning it over to the public could have unforeseen consequences. Until now, publicly funded journalism has been largely been contained to organizations like Pro Publica that launch investigations into things like patient safety and vote buying. Is the world ready for a publicly funded version of TMZ where everyone can pool money to see celebrity’s private lives?

              For now, the political dimensions of the scandal are moving too fast to assess the media fallout. We’ll report back next week on what happens to the tape — and the money collected by Gawker.

              (Image by Chris Howey via Shutterstock)

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              • The future of Bitcoin: 3 predictions from experts

                Bitcoin is a cyber-currency of growing interest to speculators, the media and — most recently — the U.S. government. Many stories about Bitcoin, which is mined by computers and circulates without a central bank, contain sinister or science-fiction elements that make it hard to tell if the currency is for real or just an overblown gimmick.

                On Thursday evening, GigaOM hosted a meetup in San Jose where six Bitcoin authorities, including investors and engineers, shared their views on how the currency is evolving and who is using it. Here are three of the larger ideas to emerge from the discussion (if you want to catch up on the basics of Bitcoin, see “Yes, you should care about Bitcoin and here’s why“):

                Bitcoin can help ordinary people

                Wences Casares, a venture capitalist and CEO of Lemon Wallet, grew up in Argentina, where he experienced first hand what happens when a government mismanages its currency: inflation, capital controls and the destruction of family savings. Today, the same thing is happening all over again as desperate Argentines try to convert their pesos into a store of value that the government can’t seize or destroy.

                One option is Bitcoin. Casares explained how some people in his country are using “old Android phones” to acquire and exchange Bitcoins at a time when the government is clamping down on the trade in U.S. dollars. More remarkably, Casares noted, is that many of the people using Bitcoin don’t know much about technology — but they do know, through hard experience, about currencies and can recognize alternate sources of money.

                Other speakers and audience members also described the potential of cyber-currencies like Bitcoin to ameliorate the broken or compromised Bitcoin meetupbanking infrastructure in places like Latin America and Asia.

                In the larger picture, Bitcoin could be just one part of an impending revolution in the world’s money transfer networks. Specifically, new currencies and transfer platforms may provide a way for people, including those who rely on remittances, to escape the high transfer fees imposed by credit card and wire companies — and simply exchange money directly with one another around the world at almost no cost.

                Bitcoin is complicated — and is going to stay that way for a while

                Mike Hearn is a young engineer from Google who uses his 20 percent time to work on developing Bitcoin software. At the meetup, he chatted about infrastructure and security with Bennett Hoffman, a former Microsoft employee who is building a new Bitcoin exchange called Buttercoin.

                The two engineers agreed that the system that creates Bitcoins is secure and stable, even if parts of the surrounding ecosystem (exchanges, wallets and so on) are not. Hearn said Bitcoin is not ready for “your grandma” just yet — and that is, in part, a choice by those who are building and fine-tuning the Bitcoin open source code bequeathed by the currency’s pseudonymous creator, Satoshi Nakaomot.

                Hearn’s point is that he and others are focused now on improving the processing and ledger system that facilitates Bitcoin transactions; they are ensuring that it can scale in the same way that the Visa payment network is able to handle sales spikes. This focus on “the guts” of Bitcoin means that, for now, the software will remain complicated and will be a challenge to those who aspire to build consumer-facing interfaces on top of it.

                This won’t, however, prevent Bitcoin from gaining traction in the real world. David Barrett, CEO of Expensify, explained earlier in the evening that his firm now allows companies to reimburse their employees’ expense reports in Bitcoin. According to Barrett, the Bitcoin option is not a gimmick but rather a cheap and practical solution for companies to pay employees across borders.

                Bitcoin will be regulated — and that’s a good thing

                Bitcoin watchers gasped this weekend when the Department of Homeland Security executed a seizure warrant against the owner of Mt. Gox, the Japanese exchange where many people trade the currency. The law enforcement action, which comes after U.S. securities regulators said they are looking at Bitcoin, posed a new liquidity threat to the currency and also reinforced its outlaw reputation.

                Surprisingly, the Bitcoin backers at the event appeared to welcome the government’s growing involvement. According to Micky Malka of Ribbit Capital, which is investing in Bitcoin ventures, regulation is not just inevitable — but desirable.

                “I’m already regulated by eight central banks,” said Malka, explaining that regulation is simply part of any mature financial system and that, in the case of Bitcoin, it is likely to introduce a new level of stability. Malka and others, including the Bitcoin Foundation, said they are less interested in libertarian fantasies than they are in establishing a rational and informed regulatory structure around the currency. Malka added that his biggest fear for Bitcoin is not the U.S. government but shenanigans by speculators.

                The bottom line

                The San Jose event felt at times like a cross between an investor seminar and a church revival, with the packed room sometimes applauding wildly at the blue skies of Bitcoin. But that doesn’t mean there’s not something very real going on here — a lot of very smart and credible people are putting a lot of time and money on the line in an effort to redefine the world’s financial infrastructure.

                According to Wences Caseres, the moment feels like 1992, when the world was on the cusp of discovering the world wide web but hadn’t yet found the right user interface. He might be right.

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              • Bitcoin price holds up as details emerge about Mt. Gox seizure

                The value of Bitcoin fell more than 10 percent overnight on Tuesday, apparently in response to Homeland Security’s decision to seize funds at a key exchange, Mt. Gox, where speculators trade the cyber-currency. The price has since returned to early-week levels, however, while new details came out about the nature of fed’s investigation. Here’s a look at the median price:

                Bitcoin price screenshot

                In any case you missed it yesterday, the federal government took its most serious action to date against Bitcoin-related activity when it shut down money transfers between Mt. Gox and payment processing service, Dwolla. Dwolla is one of the few easy ways Americans can buy and sell Bitcoins at Mt. Gox.

                On Wednesday, Ars Technica unearthed the search warrant that Homeland Security used to seize a bank account that Mt. Gox used to obtain dollars from Dwolla. The account was registered to Mugillum Sigillum LLC, a Delaware subsidiary of Japan-based Mt. Gox.

                In an affidavit, a federal agent states that Mt. Gox owner, Mark Karpeles, lied when opening the bank account in 2011. Specifically, Karpeles said “no” to questions asking if he would be engaged in a currency business and money transmissions.

                GigaOM meet up BitCoinThis misrepresentation means Karpeles has apparently violated a law prohibiting unlicensed money transmission businesses. Breaking the law can result in a 5-year prison term and permits the feds, under another statute, to seize property and keep it.

                So what does all this mean for Bitcoin aficionados? In short, the investigation is more bad news for Mt. Gox and Karpeles than for the currency itself. The loss of Dwolla as a payment mechanism at Mt. Gox will crimp a popular source of liquidity for speculators but more options are appear poised to come along. These include Coinbase, which recently received $5 million from Fred Wilson’s Union Square Ventures, and OpenCoin which just got backing from Google Ventures.

                To hear what all the Bitcoin fuss is about, come join us on Thursday in San Jose for a GigaOM meet-up from 6 to 9 where we’ll be talking with CEO who use it as well as engineers from Facebook and Google about the currency’s perils and possibilities. The event is free (and filling up fast!) thanks to our friends at Ribbit Capital. It includes cocktails too.

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              • Homeland Security seizes funds at main Bitcoin exchange

                The U.S. government has reportedly shut down a prime source of liquidity for Bitcoin by seizing an account connecting a Japanese currency exchange, Mt. Gox, and payment services provider Dwolla.

                The action by Homeland Security, reported by Betabeat, appears to be timed to send a clear message, coming during a week when Google Ventures and others announced major new investments in the popular cyber currency. The seizure itself is described in a screenshot posted by OKCupid cofounder Chris Coyne (see it below). It shows a message from Dwolla stating that Homeland Security has executed a “seizure warrant” against its account with Mt. Gox — the exchange where many people buy and sell Bitcoins.

                GigaOM meet up BitCoin

                What this means in practical terms is that Bitcoin traders are now shut off from one of the few ways to supply and receive funds from Mt. Gox. The Japanese exchange doesn’t work with mainstream banks — it only accepts funds via wire transfers and a handful of shadowy e-currencies.

                Homeland Security typically executes seizure warrants in connection with criminal investigations, and Coyne’s screenshot refers to actions in the US District Court of Maryland. A search of court records, however, comes up empty — which could mean the records are under seal. The US government has yet to issue a statement.

                Tuesday’s development is likely to provide a blow to the fledgling currency, which is mined by computers and is beyond the authority of any central bank. Last month’s Bitcoin crash, which saw its value fall from $266 to $105 in a single day, is believed to have been set off by liquidity problems at Mt. Gox. U.S.-based exchanges like Coinbase, which last week received a $5 million investment from Fred Wilson’s Union Square Ventures, provide a means to change dollars for Bitcoin, but only permits trades of up to $100.

                Dwolla, which has raised more than $20 million in funding from investors including Andreessen Horowitz, Village Ventures, Thrive Capital and Union Square Ventures, offers a free web-based software platform that lets users send, receive and request funds from any other user. It says it now has 250,000 account holders.

                The Homeland Security actions comes amid uncertainty about the US government’s regulatory powers over Bitcoin, which appears to be beyond the purview of the SEC.

                If you want to learn more about the possibilities — and the perils — of Bitcoin, come join us at GigaOM’s free meet-up in San Jose on Thursday between 6 p.m and 9 p.m. We’ll be chatting with the CEOs of Expensify and Lemon, and engineers from Facebook and Google. There will be cocktails too, courtesy of our friends at Ribbit Capital.

                Here’s the screenshot which was posted to Hacker News:

                Screen shot of Bitcoin seizure memo

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              • Apple sued over faulty power button on iPhone 4

                A Florida woman is seeking more than $5 million from Apple on behalf of thousands of iPhone owners who allegedly bought phones with defective power buttons that would not lock or turn off.

                In a class action suit filed in San Jose, California, Debra Hilton claims that Apple knew about a defect in a flex cable that controls the on-off button, but chose to stay quiet about it so as to sell more phones.

                As evidence, she points to Apple discussion forums viewed by hundreds of thousands of visitors on which users complain of “wiggly” power buttons. Hilton also points to a fix-it video on YouTube and comments by a self-described iPhone repairman who says the power button defect is prevalent on the iPhone 4 which went on sale in 2010.

                Apple did not immediately return a request for comment.

                The lawsuit claims that the defect typically arises shortly after one year at which point the warranty has expired, forcing consumers to pay $149 for repairs.

                Hilton is suing under the RICO statute, a federal racketeering law that has become a vehicle for national class actions. The lawsuit also accuses Apple of violating California’s unfair competition laws.

                You can read the complaint for yourself here:

                Apple Power Button Lawsuit


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              • A bet on Bitcoin: new VC fund invests in currency startups

                Bitcoin: is it like gold or Dutch tulip bulbs? Either way, investors are flocking to the crypto-currency, which is mined with computers and circulates outside the control of any central bank.

                The latest buzz comes by way of the Bitcoin Boost Fund, a new Silicon Valley fund that announced on Tuesday that it will hand out $50,000 to seven or so Bitcoin startups.

                All of the startups will be graduates of Boost VC, an accelerator program that seeks to mentor would-be Bitcoin barons. The accelerator, created earlier this year, is run by Adam Draper, who describes himself as a “fourth generation VC” and who is hosting a hackathon at the “Bitcoin: Future of payments” conference in San Jose this weekend.

                News of the fund, which will total around $400,000, comes less than a week after Fred Wilson’s Union Square Ventures announced it would put $5 million into Coinbase, a service that lets people store and convert Bitcoin online. (See here for all the other Bitcoin buzz last week.)

                So what sort of start-ups will the new Bitcoin fund support? Jeremy Liew of Lightspeed Venture Partners, another investor, offered some broad strokes:

                “The way to regard any tech disruption — from cloud to big data to flash storage — is that the first generation of companies are always infracture companies, the second generation are application companies. We’re right at the cusp of moving from infrastructure to applications … Maybe international money transmissions.”

                Liew added that Bitcoin is most appealing to merchants who want to impose the 3% transaction cost for payments often imposed  in the traditional financial system.GigaOM meet up BitCoin

                If you’re curious about Bitcoin, come join us at GigaOM’s meet-up this Thursday in San Jose — we’ll have CEOs who work in Bitcoin and engineers from Facebook and Google to discuss speculation, security and more. The event, which is filling up fast, is free thanks to our friends at Ribbit Capital, and takes place from 6 to 9 — it will include time for chat and cocktails.

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              • Feds grab reporters’ phone records: war on terror — or war on leaks?

                The Associated Press revealed on Monday that the Justice Department secretly obtained records for more than 20 phone lines belonging to its reporters and editors. The seizures affected both personal cell phones and office lines in AP bureaus in New York, Hartford and Washington.

                The AP’s CEO, Gary Pruitt, revealed the existence of the phone record seizures, which took place in early 2012, in a public letter to Attorney General Eric Holder which states in part:

                “There can be no possible justification for such an overbroad collection of the telephone communications of The Associated Press and its reporters [..] We regard this action by the Department of Justice as a serious interference with AP’s constitutional rights to gather and report the news.”

                Various reports of the seizures have suggested they are tied to the Justice Department’s investigation of media leaks related to a CIA operation in Yemen.

                According to David Schulz, a lawyer for the AP, the Justice Department may have violated Watergate-era regulations that require the Attorney General to sign off on subpoenas directed at members of the media. In a phone interview, Schulz told me that the government’s broad request interferes with the basic ability of a free press to report on the government.

                While the national security aspects of the story are not entirely clear, some media outlets are framing the phone record seizures as further evidence of the Obama Administration’s hardline attitude towards press leaks, which has resulted in several high profile prosecutions in the past five years.

                Leaks have become easier to trace in recent years given that so much communication involves technology that leaves virtual fingerprints of one kind or another. At the same time, national security letters and other legal trappings of the post 9/11 era mean it’s become easier for a wide variety of government and law enforcement agencies to obtain phone records without a warrant.

                Government seizures of reporters’ communications also appears at cross-purposes with calls for a federal shield law to protect journalists from having to disclose their sources; if such a law were passed, the AP episode shows the government could try and determine sources by looking at reporters’ phone records.

                The AP news compounds a bad start to the week for the White House which is already battling allegations that a politicized IRS singled out its political enemies.

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