Why did it take nearly a decade for portable video to move beyond compact DVD players? Why can we do so much more with music CDs and their successors than with DVDs and theirs? I argue the difference is baked-in DRM and its legal side-effects.

Copyright scholars have been talking for a long time about the DMCA and its impact on fair use — if your media is locked by DRM, you may be forbidden technologically from legally permissible criticism or transformation. (See the extraordinary lengths to which the MPAA goes in trying to say this isn’t so.) This is a serious problem, but it has bothered me that the focus has often eclipsed another DRM-induced problem, the foreclosure of open innovation and development around digital media.

In a draft paper, The Imperfect is the Enemy of the Good: Anticircumvention Versus Open Innovation, that will appear in the Berkeley Technology Law Journal this spring, I argue that conflicts with open development are a serious architectural flaw in anticircumvention law and policy. As we recognize the value of disruptive and user-driven innovation, we should shape the law to help, not hinder, this decentralized development.

Under an anticircumvention regime, the producers of media content can authorize or deny authorization to technologies for playing their works. Open source technologies and their developers cannot logically be authorized. “Open-source DRM” is a contradiction in terms, for open source encourages user modification (and copyleft requires its availability), while DRM compels “robustness” against those same user modifications. Since DRM aims to control use of content while permitting the user to see or hear it, it can be implemented only in software or hardware that is able to override its user’s wishes—and can’t be hacked to do otherwise. For a DRM implementation to make any sense, therefore, its barriers against user modification of the rights management must be at least as strong as those against user access to its protected content.

I characterize a “DRM imperative” and explore the technical incompatibilities between regulation by code and exploration of code. We see DRM centralizing development and forcing the black-boxing of complementary media technology, in a widening zone as it mandates that protected media be played only on compliant devices, that those may output media content only to other compliant devices, etc. The home media network is thus progressively closed to open-source development.

Foreclosing open development costs us technically, economically, and socially. We lose predicted technological improvements, those of user-innovators (von Hippel) or disruptive technologies (Christensen) from outside the incumbent-authorized set, that could offer new options for content creators and audiences (such as better playback, library, mixing, and commerce options). We lose social and cultural opportunities for commons-based peer production.

You can find the draft paper at SSRN, bepress, or here in PDF.

In a speech this morning, widely heralded (and criticized) as a call for “network neutrality,” FCC Chairman Julius Genachowski: “Why has the Internet proved to be such a powerful engine for creativity, innovation, and economic growth? A big part of the answer traces back to one key decision by the Internet’s original architects: to make the Internet an open system.”

Now “open system” doesn’t mean anarchy. The Internet has rules, technical standards codified in the unassuming sounding “Requests for Comment.” As described by the author of RFC 1, Steve Crocker (How the Internet Got Its Rules), the RFCs were designed to help people coordinate activity, to build an interoperable network: “After all, everyone understood there was a practical value in choosing to do the same task in the same way. For example, if we wanted to move a file from one machine to another, and if you were to design the process one way, and I was to design it another, then anyone who wanted to talk to both of us would have to employ two distinct ways of doing the same thing.” By coordinating an open infrastructure, the Net’s architects left room for expansion at the edges.

While critics have been quick to call the statement and the rules it prefigures “government regulation,” Chairman Genachowski says “this is not about government regulation of the Internet. It’s about fair rules of the road,” (a phrase picked up by Commissioners Copps and Clyburn in their supporting statements). Like rules of the road, basic non-discrimination and transparency principles promote interoperability: As every driver and car manufacturer knows what to expect of the highways, every Internet user and application-developer should know what he or she can assume as substrate.

Yes, road rules constrain some innovation at the core — you can’t build a public road with braid-like traffic patterns where cars freely weave in and out in both directions, or with yellow stop signs and green “yield,” but you can still improve the pavement or road reflectors. The added predictability of a standard interface enables other more significant innovation at the edges — the Porsche, Prius, Smart, and Tesla can all drive on the same standard highway.

Most importantly, Chairman Genachowski shows he understands the option value of network openness — leaving room for the unexpected:

The Internet’s creators didn’t want the network architecture — or any single entity — to pick winners and losers. Because it might pick the wrong ones. Instead, the Internet’s open architecture pushes decision-making and intelligence to the edge of the network — to end users, to the cloud, to businesses of every size and in every sector of the economy, to creators and speakers across the country and around the globe. In the words of Tim Berners-Lee, the Internet is a “blank canvas” — allowing anyone to contribute and to innovate without permission.

As the Net’s core became more fixed since the days of RFC 1, it has enabled attachment of various devices and formats, some of which would become standards in their own right (HTTP, HTML) others of which would never really take off (VRML 3D modeling). We can’t pick winners, but we can build a field for contests worth winning.

Working through the details of the proposed FCC rules will be critical, and difficult, but the principles Genachowski offers for implementation provide a solid foundation.

I’ve moved to Boulder, Colorado, for a year with the Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado. I’m here to research software patents and user innovation (and no, innovative methods of trolling aren’t quite what I think the Founders meant by “promote the progress of science and the useful arts.”)

Boulder’s a particularly good place for this study, because along with its beautiful mountains and open spaces, it has an intense entrepreneurial community, with frequent New Tech Meetups, Ignites, and informal gatherings. Plenty of innovation, how much fueled or swamped by patent?

I’m particularly interested in the cases of strategic behavior, where a patent is used not to secure limited-time exclusivity for the developer bringing a product to market, but instead as a bargaining lever, to spread FUD, or to extract value by threat. Are these indirectly promoting progress, such as by providing a market for research investment, or do they just get in the way? If you’re in the area and thinking about these issues, please let me know!

Don’t believe the anti-hype around Twitter.

Twitter hype punctured by study, reports the BBC on a recent Harvard B school finding: The median user has written only one tweet, and “the top 10% of prolific Twitter users accounted for over 90% of tweets.” As though it sealed Twitter’s fate, the BBC adds:

Research by Nielsen also suggests that many people give the service a try, but rarely or never return.

Earlier this year, the firm found that more than 60% of US Twitter users failed to return the following month.

“The Harvard data says very, very few people tweet and the Nielsen data says very, very few people listen consistently,” Mr Heil told BBC News

Rather than taking the study as a condemnation, though, I’d suggest that the fact Twitter works despite the large number of “unproductive” users is a sign of success.

More power to the Twitter team for creating a tool that allows so many people to try it so easily that the seemingly small percentage who get value out of it can find and continue using it. We should be celebrating what happens when infrastructure is cheap enough that we can accept that 60% just throw it away (even assuming all those non-tweeters aren’t using the service to listen). Rather than trying to force users to its model, Twitter has usually adapted to the customs its users have developed — and has responded to feedback when it breaks some of those conventions (see #fixreplies).

I’d go further and say a platform is only successful if it allows for failure and “unproductive” uses. If we were forced to justify our photo collection by its first picture or our word processors against the number of poorly-argued misspelled first drafts we’ve written, would we ever get to round 10, where something good emerges? Making failure cheap makes success possible.

[I like the free network service Identi.ca and cross-tweet there. I credit the Twitter team with recognizing the value in openness along many other important dimensions.]

Just in time for Ada Lovelace Day comes the news that Susan Crawford is headed to the White House as special assistant to the president for science, technology, and innovation policy.

Susan is one of clearest thinkers I know on technology policy — which is critical to the continued development of technology (see, for example, her “Biology of the Broadcast Flag” (PDF), showing early the errors of technology mandates). She founded OneWebDay, an “Earth Day for the Internet,” and reminded a global community that we sometimes need to demonstrate the Web’s values in order to preserve them. She understands that the Net’s openness and accessibility has fueled innovation around it, and has thought deeply about how we (as public, industry, and government) can help to keep that spirit going.

I’m thrilled to celebrate Ada Lovelace Day with the news of Susan Crawford’s appointment! I look forward to the advice she’ll be able to provide on the development of the open Internet.

As I learned via Twitter this morning (thanks, Tim O’Reilly), the Authors’ and Publishers’ class counsel have reached a proposed settlement of their lawsuits against Google’s book scanning program. Early press reports say Google will pay about $125 million.

There are some fascinating pieces to the settlement agreement, including some that look like private implementations of infrastructure you’d really expect government to provide: a registry of copyrighted works, a quasi-orphan-works safe harbor for good-faith use of works believed to be in the public domain. There are provisions for school and library access, and a marketplace, a clearing-center for Google to share revenue from commercial uses it makes.

I worry about the effects on competition — Google’s high settlement payments are barriers to entry by anyone else. Though it’s plausible no one had the resources or spine to compete with Google regardless, a judicial determination that the use was fair would have enabled more competition in parallel and distinct library offerings. Now, Google cements its advantage in yet another field. (And of course, with the circularity of “effect on the market” testing, makes it harder for someone else to claim fair use.)

More to come on closer reading…

Hasbro should have settled with the Scrabulous developers, not sued

While Hasbro was scrapping with Mattel over rights to develop an official online Scrabble (the two split geographic ownership of the Scrabble trademark), the Agarwalla brothers were building one. Their Facebook app, launched a year ago, won a loyal following among Scrabble fans who appreciated a chance to play the word game online, with friends in their social networks. Scrabulous listened to user suggestions, enhancing the online version to the point where it could boast 1.3 million monthly users and a 4.2 star rating, (as compared to 235k users giving Hasbro’s recently launched “beta” 1.2 stars).

Hasbro, however, responded to Scrabulous with a lawsuit, filed in the Southern District of New York, claiming copyright and trademark infringement, trademark dilution, and unfair competition. In response, the Agarwalla brothers closed the Scrabulous app to users whose IP addresses were located in the U.S. and Canada. (Since the Scrabulous website remains accessible from North American IPs, it’s possible the Facebook app was restricted under pressure from and on Facebook.) The EA Scrabble beta has been criticized as more visual flash than substance, without many of the playability features users had appreciated in Scrabulous.

Whether or not it has the legal right, I think Hasbro’s lawyers gave the company bad business advice. As I’ve said before, I believe Hasbro has no copyright claim, but might have (easily avoidable) trademark claims based on the “Scrabulous” name. If trademark’s value is goodwill, Hasbro’s federal complaint lost far more in goodwill than it preserved in control.

Hasbro may think it can ride this one out, that even 1.3 million Facebookers are only a small fraction of those it might interest in an “official” version later. Numerically, of course, that may be correct, but the raw numbers would miss the identities of those users.

I just came out of a three-day workshop on user innovation, where much research was presented on the value of “lead users” in innovation (see Democratizing Innovation for more). Lead users, such as Tim O’Reilly’s “alpha geeks,” push products and services to their limits, tweaking and often improving when their needs aren’t met by the stock components. Smart companies learn to listen to these users — while some of their demands will be unique corner cases, others are early indicators of where the masses will be soon — and where profits are to be made by a company that can supply needs and lead demand.

The Net makes lead-user innovation easier than ever, lowering the costs of communications channels to users sharing their enthusiasm and jointly developing ideas. They often freely reveal ideas and improvements that the savvy company can use in its own product development.

Some companies, O’Reilly’s among them, recognize the value of lead-user innovation and foster these user communities with conferences, forums, or support. When they take ideas and develop them further, to a mass audience now caught up to the curve, they do it so everyone feels fairly treated: the lead users get access to better products the company can produce at larger scale — and a platform for further innovation. Maybe the company even gets a chance to steer the “hackers” toward developments it prefers.

Others, however, see any hacking as “unauthorized,” to be shut down with cease-and-desist threats. They send nasty letters that may shut down the activity but also alienate the users who might show them where to go next. This is what Hasbro has done with its lawsuit against the Agarwalla brothers behind Scrabulous.

The Scrabulous users included Scrabble’s lead-user enthusiasts. Many fans posted to the application’s forum or “wall” (10,953 posts), giving the app developers (and anyone listening) both praise and suggestions for further enhancement. These lead users both told and showed where they wanted the game to go next. The Agarwalla brothers themselves were lead user innovators par excellence, spotting a need and filling it.

Hasbro’s lawsuit response to this outpouring of enthusiasm around Scrabble play quashed much of that lead-user drive. The posts on the EA “Scrabble beta” forum mix criticism of the company with complaints of bugs. Hasbro has neither the quality application nor the community around “official” Scrabble as the Agarwalla brothers had for Scrabulous.

There should have been enough value in Scrabulous to share — Hasbro does have US and Canada trademark rights to Scrabble, which imparted some value to the “Scrabulous” app, and Hasbro’s authorization could have allowed Scrabulous to build even further on the recognized brand. The Agarwallas have shown both programming talent and the ability to engage other enthusiasts. Together, they could create more value than either alone, and likely more than enough extra value to make it worth both their whiles to cooperate. As is, some of that value will migrate over to Wordscraper (Scrabulous’s revised form, which is fun but suffers from lack of interoperability with Scrabble), and some will head to authorized Scrabble, but some will dissipate entirely.

Apple’s recent update, which “bricked” unlocked iPhones and reverted the rest to block third party applications, caused Gizmodo’s reviewer to revise early enthusiasm for the gadget:

It’s about 3 months after the iPhone launch, and happy with the improvements, I was planning to change our “Wait” verdict to a full-on and rabid “Buy”. That wasn’t because of Apple, but because of the cool apps being offered by independent developers. All that came to an end yesterday after the new Apple firmware 1.1.1 neutered the handset. Sure, unlocked iPhones were broken. But more importantly, Apple wiped away the powerful programs that helped push the iPhone to greatness. With this, I’m going to have to move our recommendation from “Wait” to “Don’t hold your breath.” I’m done with this handset until third-party apps come back.

For a brief while, it seemed Apple got it. Lowering the iPhone’s price enlarged the virtual network of users and potential hackers who might get one, and acquiescence toward third-party applications let those flourish, both expanding the device’s utility beyond what was built in by Apple. Then, just as the gadget’s ecosystem was getting interesting, Apple razed the ground for some new silos.

Some Gizmodo commenters ridicule the protest, arguing that few iPhone owners are hackers, but they overlook the range of hack or customization desires. After all, people regularly install new programs on their Mac computers; they buy an estimated $1 billion in iPod accessories annually. When people spend up to a third of the price of their iPods to customize the devices’ appearance or connectivity options, it’s because those increase the value of the devices. It’s not a leap to expect they also want to add some internal customization to their phones.

But Apple’s Mr. Hyde side took precedence once again, as it bowed to the whims of its carrier partners: As the NYT reports, “Steven P. Jobs, Apple’s chief executive, has said the company wanted to maintain control over the iPhone’s functions to protect carrier networks and to make sure the phone was not damaged.”

All of which suggests that no matter how large a gadget’s virtual network is, it’s vulnerable if a closure-prone sponsor with closed-source core is its chief node.